TDS under section 194-IA

Section 194-IA of the Income Tax Act makes the buyer of immovable property deduct tax at source when the consideration is ₹50,00,000 or more: on every payment the buyer keeps back 1%, deposits it with the Income Tax department in the developer's name (Form 26QB) and gives the developer a certificate (Form 16B). The developer receives the rest and later claims the deducted amount against its own income tax. In NirmaanOne the demand bills the buyer the full amount, the way the invoice reads; the TDS is money that never reaches the bank, so it enters the books as its own entry, a TDS credit, on the day the buyer's deposit is evidenced.

How it works in NirmaanOne

The rule

The rate and threshold live in Settings > Organization, card TDS on sales (section 194-IA), as an effective-dated rule. Every organization is seeded with the statutory row: section 194-IA, rate 1%, threshold ₹50,00,000, effective 1 June 2013. A change in law is a new row from its start date (Add rule, with the Edit permission on Organization Settings); the last row of a section cannot be deleted ("Keep at least one 194-IA rule; set its rate to 0 to stop deducting"). The dialog also accepts other sections, but only the 194-IA row is ever applied to demands.

Where it applies

TDS is worked out on booking demands only. Demands on a society member's offer (differential area, legal charges) carry no TDS: an offer is not a sale of property to the member.

• Consideration = every receivable charge on the booking's termsheet excluding tax: Unit Base Price, floor rise, PLC, parking slot charges, club, legal, development and so on, across all installments. Deposits, maintenance and society charges on the termsheet count too, because they are receivable charges; only tax is left out, so GST is never part of it.
• The rule in force is the one whose Effective from is the latest on or before the demand date. Editing a draft demand's date re-reads the rule.
• TDS applies when the consideration is at or above the rule's threshold. Then the expected TDS = the demand's ex-GST subtotal × rate ÷ 100 (every non-tax line on the demand), rounded half-up to two decimals. Below the threshold, or with no rule, TDS is ₹0.
• Payable in money = total (subtotal + GST) − expected TDS. It is guidance: what the buyer should transfer. The demand stores the section and rate it was raised with, so a later rule change never rewrites an old demand.

The same calculation runs in three other places so figures agree: the Termsheet & schedule tab shows the TDS per installment using the rule in force on the installment's due date (the booking date when the row is undated), the Raise demand dialog shows it per installment to bill, and a demand run computes it per drafted demand on the run's demand date.

The demand bills the full total

Issuing the demand posts one Sales voucher:

• Debit the buyer's party ledger for the full total (subtotal + GST), opening a bill numbered like the demand and due on its due date;
• Credit each charge to the ledger its component is mapped to (or the contract liability when the revenue policy defers it), and the GST legs.

Nothing is posted to TDS Receivable at issue. The Demand page's Amounts card reads Total amount, GST, Grand total billed, "Expected TDS 194-IA @ 1%" as a deduction, Payable in money, Received, TDS credited, Outstanding and, while something is still expected, Of which TDS credit pending, with the note "The buyer is billed the full total and pays it in money less the TDS they deduct (194-IA). The TDS reaches the books when their deposit (Form 16B / 26QB) is recorded as a TDS credit; the demand reads Paid once the money received reaches the payable, with the TDS credit shown as pending until then."

The figures follow these rules:

• Outstanding = total − money received − TDS credited: what is still open on the bill.
• TDS credit pending = expected TDS − TDS credited, never more than what is outstanding. A buyer who deducted nothing and paid the whole total leaves nothing pending.
• What the buyer still has to pay in money = outstanding − TDS credit pending. The Demands list shows it under Paid as "<amount> open", with "TDS credit pending <amount>" underneath.
• The demand reads Paid once the money received reaches the payable in money (the TDS credit may still be pending) or once nothing is outstanding; Partially Paid as soon as anything, money or a TDS credit, has come in. A receipt still settles a Paid demand that has an amount open, for a buyer who did not deduct after all and pays the rest.

The TDS credit

When the buyer hands over the Form 16B (or the 26QB challan), click Record TDS credit on the demand's Amounts card (the Create permission on Payments; the demand must be issued with something outstanding), or open Payments > TDS credits and click Record TDS credit there. The Record TDS credit page takes the demand, the TDS amount (at most what is outstanding on the demand), Deducted on (not before the demand date), the Section, Deposited on, the Form 16B certificate number and Form 16B date, the Form 26QB acknowledgement and Notes; Record and post numbers it TDS-<financial year>-<serial> and posts a Journal voucher dated the credit date:

• Debit 1300 TDS Receivable for the amount, narrated "TDS 194-IA deducted by the buyer on demand <no> (Form 16B <certificate>)";
• Credit the buyer's ledger against the demand's bill.

So the bill falls by the credit, the receivable from the department rises, and the demand's TDS credited and status are recomputed the way a cleared receipt recomputes them. The demand page lists the credits in the card TDS credits against this demand (Credit, Date, Form 16B / 26QB, Status, Amount). A credit's certificate and challan details can be edited later; its amount and date cannot: cancel it (Cancel credit on the TDS credit page, which posts a mirror voucher and reopens the bill by that amount) and record a new one. See Record a TDS credit. NirmaanOne records the deposit; it does not file returns or generate certificates, and it does not clear 1300 TDS Receivable: claiming the credit against the company's income tax is a manual voucher for your accountant.

The dashboard's Needs you queue counts the demands whose expected TDS has no credit yet under "TDS credits not recorded" ("TDS the buyers are expected to deduct with no TDS credit (Form 16B / 26QB) recorded yet").

Demands issued before 10 October 2026

Older demands booked the TDS differently: the buyer's bill was the payable amount and the TDS was debited to 1300 TDS Receivable on issue. Those demands keep that model. Their Amounts card reads Grand total, "TDS 194-IA @ 1%", Grand total payable to developer, Received, Outstanding and Form 16B, with the note "Issued before 10 October 2026: the TDS was posted to TDS Receivable on issue, so the buyer owes the payable. The buyer deposits the TDS with the Income Tax department and gives a Form 16B, recorded here." The certificate is recorded on the demand itself with Record Form 16B (it reads Form 16B once recorded; the Edit permission on Demands): the dialog "TDS certificate (Form 16B)" reads "The buyer deducted <TDS> (194-IA) on demand <no> and deposits it with the Income Tax department. Record the certificate they hand over." and takes a Certificate number (placeholder "Form 16B / challan reference") and Certificate date; Save confirms with "Form 16B recorded."

The two models never mix. Recording a TDS credit against an older demand is refused: "Demand <no> booked its TDS when it was issued; record the buyer's Form 16B on the demand itself (Record Form 16B on its Amounts card)". Recording a Form 16B on a demand that bills the full total is refused: "Demand <no> bills the full total; record the TDS the buyer deposited as a TDS credit (Payments > TDS credits), which carries the Form 16B and the 26QB challan". The dashboard's "TDS credits not recorded" row counts an older demand while its certificate is missing.

Things that touch the same figures

• Receipts carry no TDS. Record receipt has no TDS field for a receipt any more; the hint under Amount received reads "What reached the bank. The TDS the buyer deducted is recorded as a TDS credit, not here." A receipt sent with TDS on it is refused: "The TDS a buyer deducts never reaches the bank: record it as a TDS credit under Payments > TDS credits, not on the receipt". Receipts recorded earlier with their own TDS keep it, read-only. Payouts still have TDS deducted and TDS section, because there the developer is the one deducting.
• Cancellation. The Cancel booking wizard counts the TDS credits recorded against the booking's demands as TDS the buyer deducted (in the gross received, not in the net). Its tick box Reverse the <amount> TDS the buyer deducted (TDS credits and receipts) decides whether that TDS is credited back out of 1300 (the buyer reclaims it and the refund is of the money actually received) or kept (the refund is of the gross). A credit note on a paid demand reverses that demand's revenue and GST. A demand with a TDS credit against it cannot be cancelled on its own page: "A TDS credit is recorded against demand <no>; cancel it under Payments > TDS credits first".
• Appropriation. Only money received is placed on a demand's charge lines; a TDS credit settles the bill but is never appropriated, so the TDS share of a line stays unplaced.
• The booking's Balance. On Demands & money the balance is the agreed total minus money received, so it still contains the TDS the buyer deposited with the department.
• Commissions are the other direction. On a channel-partner commission the developer is the one deducting, under section 194H at 2% by default; approval credits 2300 TDS Payable (or the commission mapping's tax ledger). Payout runs do not compute TDS on member benefits.

Example

Anil Deshmukh books unit A-1203 on Sai Darshan: 650 sq ft at ₹12,000 per sq ft, a consideration of ₹78,00,000.00 excluding GST. That is above the seeded threshold of ₹50,00,000, so every demand on this booking carries TDS.

The demand for the "Plinth completed" stage, 10% of the price, bills ₹7,80,000.00 before GST with 5% GST of ₹39,000.00. Its Amounts card reads:

• Total amount (before GST): ₹7,80,000.00
• GST: ₹39,000.00
• Grand total billed: ₹8,19,000.00
• Expected TDS 194-IA @ 1%: 7,80,000.00 × 1 ÷ 100 = − ₹7,800.00
• Payable in money: 8,19,000.00 − 7,800.00 = ₹8,11,200.00

Issuing it posts the Sales voucher: Dr CUST-00023 Anil Deshmukh ₹8,19,000.00 (bill DM-2026-27-00087, due 15 October 2026); Cr ₹7,80,000.00 to the charge's ledger (under the default Ind AS 115 policy, 2100 Contract Liability - Sale of Units) and ₹19,500.00 each to CGST and SGST. Debits 8,19,000 = credits 7,80,000 + 39,000 = ₹8,19,000.00.

Mr Deshmukh transfers ₹7,72,200.00 of consideration into the collection account and ₹39,000.00 of GST into the GST account; together ₹8,11,200.00, the payable in money. The two receipts are allocated to DM-2026-27-00087 and cleared. The demand now reads Received ₹8,11,200.00, Outstanding ₹7,800.00, Of which TDS credit pending ₹7,800.00, and its status is Paid, because the money received has reached the payable in money. On the Demands list the Paid cell shows "TDS credit pending 7,800.00" and nothing "open".

He files Form 26QB for ₹7,800 and gives the office Form 16B no. ABCD1234E dated 30 October 2026. The accountant clicks Record TDS credit on the demand, enters ₹7,800.00 deducted on 20 October with the certificate and the challan, and clicks Record and post: "TDS credit TDS-2026-27-00004 recorded; voucher JV-0031 posted." The Journal voucher debits 1300 TDS Receivable ₹7,800.00 and credits Anil Deshmukh ₹7,800.00 against bill DM-2026-27-00087. The demand reads TDS credited ₹7,800.00 and Outstanding ₹0.00; the card TDS credits against this demand lists TDS-2026-27-00004 as Recorded. 1300 TDS Receivable shows the ₹7,800.00 debit until the company's income-tax adjustment is posted by hand.

Rounding follows the half-up rule: an installment of ₹4,39,512.75 gives 4,39,512.75 × 1 ÷ 100 = 4,395.1275 → ₹4,395.13.

A 2 BHK on the same project with a consideration of ₹48,50,000 is below the threshold: its demands show no TDS line, "No TDS applies to this deal." on the termsheet tab, and the payable equals the total.

Where you see it

• Organization: the TDS on sales (section 194-IA) card and Add rule.
• Demand: the Amounts card, Record TDS credit (or Record Form 16B on an older demand), the card TDS credits against this demand and the Sales voucher.
• Demands: Payable shown as "<total> less TDS", and "TDS credit pending <amount>" under Paid.
• TDS credits, Record TDS credit and TDS credit: the credits themselves.
• Demand run: TDS and payable per drafted demand.
• Termsheet & schedule: the TDS column per installment and the Raise demand dialog.
• Demands & money: received, outstanding and balance.
• Record receipt / Record payout and Payment: the refusal of TDS on a receipt, and the TDS deducted and TDS section fields on a payout.
• Cancel booking: the TDS reversal tick box.
• Dashboard: "TDS credits not recorded" under Needs you.
• Commission: TDS 194H on brokerage.
• Ledgers and Ledger report: 1300 TDS Receivable and 2300 TDS Payable.

Related

• Effective-dated rules
• Demands
• Record a TDS credit
• Manual appropriation of receipts
• Channel-partner commissions
• Cancellation and forfeiture
• Payment clearing