CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194-IC — Payment Under a Specified Agreement (Joint Development) (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. Inserted by the Finance Act, 2017 (w.e.f. 1 April 2017); scheme-specific.
Finance Act, 2026: No amendment.
Mechanism: Any person paying monetary consideration (in addition to the project share) to a resident landowner under a section 45(5A) joint development agreement deducts tax at 10%; no threshold; in-kind consideration excluded.
Litigation profile: None. A recent, scheme-specific provision tied to section 45(5A) — the candour rule applies.
A. SECTION COMMENTARY
Section 194-IC, inserted by the Finance Act, 2017 with effect from 1 April 2017, requires any person paying to a resident, under a 'specified agreement' referred to in section 45(5A), any sum by way of consideration (not being consideration in kind) in addition to the share in the project, to deduct tax at ten per cent at the time of credit or payment, whichever is earlier. It is the deduction counterpart of the special capital-gains regime for joint development agreements in section 45(5A), which defers the landowner's capital gains to the year the completion certificate is issued.
Monetary consideration only; no threshold
Section 194-IC bites only on the monetary component paid to the landowner under a joint development agreement — the cash paid in addition to the landowner's share of the developed project. The in-kind consideration (the share in the constructed area) is outside the deduction, consistent with section 45(5A) which charges that component on completion. There is no monetary threshold, so any such cash payment attracts deduction. Notably, section 194-IC is not confined to individual/HUF payers and is not subject to the section 44AB filter that qualifies sections 194-I/194-IB.
A recent, scheme-specific provision — candour
Section 194-IC is recent, narrow and tied to the section 45(5A) regime; it has generated no body of judicial authority. In candour, it must be applied from its terms read with section 45(5A), and with the general machinery and default provisions of the Chapter.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194-IC. Notwithstanding anything contained in section 194-IA, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon.
C. AUTHORITIES
Candour rule strictly observed: section 194-IC is a recent, scheme-specific provision with no judicial authority. Only the statutory scheme (read with section 45(5A)) is offered.
No direct authority — statutory backdrop
Interaction with section 45(5A) (joint development agreements)
Principle: Section 194-IC collects tax on the monetary (cash) consideration paid to a landowner under a joint development agreement; the in-kind share is charged separately under section 45(5A) on issue of the completion certificate. The deduction tracks the cash component only.
Use: Locates the section within the JDA capital-gains scheme and fixes what the deduction attaches to.
Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC) — cognate on default
Principle: No second recovery from the deductor where the payee has paid the tax; section 201(1A) interest runs for the period of default.
Use: Governs the consequence of a failure to deduct under section 194-IC.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194-IC — Payment Under a Specified Agreement (Joint Development) (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. Inserted by the Finance Act, 2017 (w.e.f. 1 April 2017); scheme-specific.
Finance Act, 2026: No amendment.
Mechanism: Any person paying monetary consideration (in addition to the project share) to a resident landowner under a section 45(5A) joint development agreement deducts tax at 10%; no threshold; in-kind consideration excluded.
Litigation profile: None. A recent, scheme-specific provision tied to section 45(5A) — the candour rule applies.
A. SECTION COMMENTARY
Section 194-IC, inserted by the Finance Act, 2017 with effect from 1 April 2017, requires any person paying to a resident, under a 'specified agreement' referred to in section 45(5A), any sum by way of consideration (not being consideration in kind) in addition to the share in the project, to deduct tax at ten per cent at the time of credit or payment, whichever is earlier. It is the deduction counterpart of the special capital-gains regime for joint development agreements in section 45(5A), which defers the landowner's capital gains to the year the completion certificate is issued.
Monetary consideration only; no threshold
Section 194-IC bites only on the monetary component paid to the landowner under a joint development agreement — the cash paid in addition to the landowner's share of the developed project. The in-kind consideration (the share in the constructed area) is outside the deduction, consistent with section 45(5A) which charges that component on completion. There is no monetary threshold, so any such cash payment attracts deduction. Notably, section 194-IC is not confined to individual/HUF payers and is not subject to the section 44AB filter that qualifies sections 194-I/194-IB.
A recent, scheme-specific provision — candour
Section 194-IC is recent, narrow and tied to the section 45(5A) regime; it has generated no body of judicial authority. In candour, it must be applied from its terms read with section 45(5A), and with the general machinery and default provisions of the Chapter.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194-IC. Notwithstanding anything contained in section 194-IA, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon.
C. AUTHORITIES
Candour rule strictly observed: section 194-IC is a recent, scheme-specific provision with no judicial authority. Only the statutory scheme (read with section 45(5A)) is offered.
No direct authority — statutory backdrop
Interaction with section 45(5A) (joint development agreements)
Principle: Section 194-IC collects tax on the monetary (cash) consideration paid to a landowner under a joint development agreement; the in-kind share is charged separately under section 45(5A) on issue of the completion certificate. The deduction tracks the cash component only.
Use: Locates the section within the JDA capital-gains scheme and fixes what the deduction attaches to.
Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC) — cognate on default
Principle: No second recovery from the deductor where the payee has paid the tax; section 201(1A) interest runs for the period of default.
Use: Governs the consequence of a failure to deduct under section 194-IC.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.