Section 194IC: TDS on Joint Development Agreements (JDA)

Joint Development Agreements (JDAs) are common in real estate projects.
To ensure tax compliance, Section 194IC requires TDS on monetary consideration paid by developers to landowners.

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What Is Section 194IC?

Section 194IC applies when:

• Landowner enters into JDA with developer

• Developer pays monetary consideration (cash component)

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TDS Rate Under Section 194IC

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Timing of TDS Deduction

• At the time of payment of monetary consideration

• Not on transfer of development rights alone

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Example: JDA Transaction

• Cash consideration: ₹1 crore

TDS @10% = ₹10 lakh

Developer pays:

• ₹90 lakh to landowner

• ₹10 lakh as TDS

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Important Notes

• TDS applies only on cash component

• Constructed area is taxed separately under capital gains provisions

• Section 194IC is independent of Section 45(5A)

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Common Errors

• Not deducting TDS assuming Section 45(5A) covers everything

• Deducting TDS on non-monetary consideration

• Late deposit

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Internal Links (WonderTax)

• Capital Gains on Property & JDA
  https://wondertax.in/capital-gains-tax

• TDS Compliance & Advisory
  https://wondertax.in/tds-return-filing

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CTA – WonderTax

👉 Entering into a Joint Development Agreement?

WonderTax helps with:

• JDA tax structuring

• Section 194IC compliance

• Capital gains planning

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