{"id":30756,"date":"2025-12-23T16:51:31","date_gmt":"2025-12-23T11:21:31","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=30756"},"modified":"2025-12-23T17:20:40","modified_gmt":"2025-12-23T11:50:40","slug":"tds-on-jda-a-commonly-missed-compliance","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/","title":{"rendered":"TDS on JDA : A Commonly Missed Compliance"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d1988079987\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d1988079987\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#TDS_on_Joint_Development_Agreements_%E2%80%93_Section_194-IC\" title=\"TDS on Joint Development Agreements &#8211; Section 194-IC\">TDS on Joint Development Agreements &#8211; Section 194-IC<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#Applicability_of_Section_194-IC\" title=\"Applicability of Section 194-IC\u00a0\">Applicability of Section 194-IC\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#Time_of_Deduction\" title=\"Time of Deduction: \">Time of Deduction: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#Taxability_for_Landowner\" title=\"Taxability for Landowner: \">Taxability for Landowner: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#TDS_Rate\" title=\"TDS Rate: \">TDS Rate: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#What_NOT_to_do_in_case_of_a_Joint_Development_Agreement\" title=\"What NOT to do in case of a Joint Development Agreement\">What NOT to do in case of a Joint Development Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#Why_TDS_on_Joint_Development_Agreement_matters\" title=\"Why TDS on Joint Development Agreement matters\">Why TDS on Joint Development Agreement matters<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#Common_mistakes_Seen_in_Practice_while_using_JDA_in_practice\" title=\"Common mistakes Seen in Practice while using JDA in practice \">Common mistakes Seen in Practice while using JDA in practice <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#What_is_the_difference_between_194-IC_and_194-IA\" title=\"What is the difference between 194-IC and 194-IA?\">What is the difference between 194-IC and 194-IA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/tds-on-jda-a-commonly-missed-compliance\/#Non-Compliance_Consequences_of_TDS_on_Joint_Development_Agreement\" title=\"Non-Compliance\u00a0Consequences of\u00a0TDS on Joint Development Agreement\">Non-Compliance\u00a0Consequences of\u00a0TDS on Joint Development Agreement<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-8651\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/08\/income-tax-tds-return-500x500.jpg\" alt=\"www.carajput.com; Income Tax\" width=\"799\" height=\"599\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/08\/income-tax-tds-return-500x500.jpg 500w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/08\/income-tax-tds-return-500x500-300x225.jpg 300w\" sizes=\"(max-width: 799px) 100vw, 799px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"TDS_on_Joint_Development_Agreements_%E2%80%93_Section_194-IC\"><\/span><span style=\"color: #000080;\"><strong>TDS on Joint Development Agreements &#8211; Section 194-IC<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>JDA is an agreement where a landowner allows development of property in exchange for constructed area and\/or cash. \u00a0Meaning of \u201cSpecified Agreement\u201d : As defined under Section 45(5A), a <em>specified agreement<\/em> is a registered joint development agreement where:<\/p>\n<ul>\n<li>The landowner is an Individual or HUF<\/li>\n<li>The property is land or building or both<\/li>\n<li>The developer is permitted to develop the project<\/li>\n<li>Consideration is received partly or wholly in kind (constructed area) and\/or cash<\/li>\n<li>Only the cash component is covered U\/s 194-IC<\/li>\n<\/ul>\n<p>JDA are common in real estate development, where landowners collaborate with developers to monetize land without outright sale. To ensure tax collection at the source on such transactions, Section 194-IC was introduced alongside Section 45(5A). This section mandates TDS only on the monetary (cash) consideration paid to an individual or HUF landowner under a specified agreement. It mandates TDS on monetary consideration paid under a JDA.<\/p>\n<p>JDA are widely used in real estate projects. But, TDS under JDAs is frequently misunderstood and incorrectly applied, leading to unnecessary notices, demands, and disputes. TDS U\/s 194-IC applies ONLY on monetary consideration (cash). &amp; No TDS is required on non-monetary consideration, i.e., flats \/ constructed area. Many taxpayers assume that since capital gains taxation is deferred U\/s 45(5A), TDS can also be deferred. This assumption is incorrect. Deferral of capital gains \u2260 deferral of TDS &amp; TDS obligation U\/s 194-IC arises independently at the time of payment.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Applicability_of_Section_194-IC\"><\/span><span style=\"color: #000080;\"><strong>Applicability of Section 194-IC<\/strong><strong>\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Section 194-IC applies when all the following conditions are satisfied:<\/p>\n<table style=\"height: 1134px;\" width=\"790\">\n<thead>\n<tr>\n<td><strong>Particulars<\/strong><\/td>\n<td><strong>Details<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Deductor<\/td>\n<td>Developer\/Builder<\/td>\n<\/tr>\n<tr>\n<td>Deductee<\/td>\n<td>Resident Individual \/ HUF landowner<\/td>\n<\/tr>\n<tr>\n<td>Nature of consideration<\/td>\n<td>Monetary (cash) consideration only<\/td>\n<\/tr>\n<tr>\n<td>Agreement<\/td>\n<td>Registered JDA covered under Section 45(5A)<\/td>\n<\/tr>\n<tr>\n<td>Threshold<\/td>\n<td>No minimum limit, No TDS on constructed area \/ flats \/ units<\/p>\n<p>&nbsp;<\/td>\n<\/tr>\n<tr>\n<td>o\u00a0\u00a0 Section Applicable: 194-IC : Applies only to monetary consideration (cash component).<\/p>\n<p>o\u00a0\u00a0 Rate: 10%<\/p>\n<p>o\u00a0\u00a0 Deductor: Developer<\/p>\n<p>o\u00a0\u00a0 Deductee: Individual\/HUF landowner<\/p>\n<p>o\u00a0\u00a0 Threshold: <em>No minimum limit<\/em><\/p>\n<p>o\u00a0\u00a0 Timing: At the time of payment (not at possession or registration).<\/p>\n<p><span style=\"color: #000080;\"><strong>Compliance Responsibilities of Developer<\/strong><\/span><\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Obtain TAN<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Obtain PAN of landowner<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Deduct TDS correctly<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Deposit TDS:<\/p>\n<p>o\u00a0\u00a0 March: by 30th April<\/p>\n<p>o\u00a0\u00a0 Other months: by 7th of next month<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 File Form 26Q<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Issue Form 16A<\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><span class=\"ez-toc-section\" id=\"Time_of_Deduction\"><\/span><span style=\"color: #000080;\"><strong>Time of Deduction: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>TDS is to be deducted at the earlier of the credit of the amount to the landowner\u2019s account or the actual payment (by cash \/ cheque \/ transfer \/ any mode). Capital gains deferral U\/s 45(5A) does NOT defer TDS U\/s 194-IC<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Taxability_for_Landowner\"><\/span><span style=\"color: #000080;\"><strong>Taxability for Landowner: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The entire consideration (cash + FMV of constructed area) is taxable as capital gains u\/s 45(5A), and TDS deducted u\/s 194-IC can be claimed as credit in ITR. Credit reflected in Form 26AS \/ AIS<\/p>\n<p>Who deducts TDS: the developer\/builder. and TAN mandatory in case of JDA; TDS is not applicable on constructed areas. Only cash consideration is covered. TDS will be deducted at the time of payment or credit, whichever is earlier. Section 194-IC does not permit exemption declarations. The due date to deposit TDS in case of JDA is the 7th of next month (30th April for March deductions).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"TDS_Rate\"><\/span><span style=\"color: #000080;\"><strong>TDS Rate: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Standard rate: 10%. If PAN is not furnished: 20% (Section 206AA), no surcharge or cess. TDS return is applicable under Form 26Q. PAN number of landowners is mandatory; otherwise, TDS is at 20%. In case TDS is not deducted. Then interest, penalty, and disallowance consequences apply. GST applicable on cash consideration under JDA Depends on facts, and GST implications are separate and must be examined independently.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_NOT_to_do_in_case_of_a_Joint_Development_Agreement\"><\/span><span style=\"color: #000080;\"><strong>What NOT to do in case of a Joint Development Agreement<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Deduct TDS on constructed area (flats).<\/li>\n<li>Apply Section 194-IA (that\u2019s for property purchase, not JDAs).<\/li>\n<li>Assume TDS can be deferred because capital gains are deferred under 45(5A).<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Why_TDS_on_Joint_Development_Agreement_matters\"><\/span><span style=\"color: #000080;\"><strong>Why TDS on Joint Development Agreement matters<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Incorrect TDS: Notices, interest, and penalties.<\/li>\n<li>Correct compliance: Smooth assessment, avoids litigation.<\/li>\n<li>Always cross-check the agreement for monetary consideration clauses and deduct TDS before making any payment. Even token amounts trigger TDS under 194-IC. Correct identification of the TDS section and timing of deduction is critical. Timely and accurate compliance helps avoid future litigation and interest\/penalty exposure.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Common_mistakes_Seen_in_Practice_while_using_JDA_in_practice\"><\/span><span style=\"color: #000080;\"><strong>Common mistakes Seen in Practice while using JDA in practice <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Applying Section 194-IA instead of Section 194-IC<\/li>\n<li>Deducting TDS on constructed area \/ flats<\/li>\n<li>Ignoring TDS on cash consideration due to deferred capital gains<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_is_the_difference_between_194-IC_and_194-IA\"><\/span><span style=\"color: #000080;\"><strong>What is the difference between 194-IC and 194-IA?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 245px;\" width=\"751\">\n<thead>\n<tr>\n<td><span style=\"color: #000080;\"><strong>194-IC<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>194-IA<\/strong><\/span><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>JDA specific<\/td>\n<td>Normal property purchase<\/td>\n<\/tr>\n<tr>\n<td>Cash consideration only<\/td>\n<td>Entire sale consideration<\/td>\n<\/tr>\n<tr>\n<td>TAN required<\/td>\n<td>TAN not required<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Capital gains deferral does not mean TDS deferral: Correct application of Section 194-IC at the right time prevents future litigation and tax exposure.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Non-Compliance_Consequences_of_TDS_on_Joint_Development_Agreement\"><\/span><span style=\"color: #000080;\"><strong>Non-Compliance\u00a0<\/strong><\/span><span style=\"color: #000080;\"><strong>Consequences of\u00a0<\/strong><\/span><span style=\"color: #000080;\"><strong>TDS on Joint Development Agreement<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 375px;\" width=\"765\">\n<thead>\n<tr>\n<td><span style=\"color: #000080;\"><strong>Default<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Consequence<\/strong><\/span><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Non-deduction<\/td>\n<td>Interest @ 1% p.m.<\/td>\n<\/tr>\n<tr>\n<td>Late deposit<\/td>\n<td>Interest @ 1.5% p.m.<\/td>\n<\/tr>\n<tr>\n<td>Failure to deduct\/pay<\/td>\n<td>Penalty u\/s 271C<\/td>\n<\/tr>\n<tr>\n<td>Expense disallowance<\/td>\n<td>30% u\/s 40(a)(ia)<\/td>\n<\/tr>\n<tr>\n<td>Late TDS return<\/td>\n<td>INR 200 per day<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"<p>TDS on Joint Development Agreements &#8211; Section 194-IC JDA is an agreement where a landowner allows development of property in exchange for constructed area and\/or cash. \u00a0Meaning of \u201cSpecified Agreement\u201d : As defined under Section 45(5A), a specified agreement is a registered joint development agreement where: The landowner is an Individual or HUF The property &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[10392],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/30756"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=30756"}],"version-history":[{"count":3,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/30756\/revisions"}],"predecessor-version":[{"id":30759,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/30756\/revisions\/30759"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=30756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=30756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=30756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}