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File Form 26QB – TDS on Sale of Property | Download Form 16B – TDS Certificate

Last Update Date : November 27, 2018

With effect from 1st June 2013, as per section 194IA, the purchaser of immovable property has to deduct tax at source from the consideration paid to the resident seller, wherein the consideration of such property exceeds or is equal to Rs 50 lakh. In this guide, we will discuss how to file Form 26QB for the payment of TDS on sale of property and download Form 16B.

Payment of TDS on sale of Property

  • The buyer has to deduct TDS @ 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.
  • No TDS is deducted if sale consideration is less than Rs 50 lakh. If instalments are being paid, TDS has to be deducted on each instalment.
  • Tax is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55 lakh, you have to pay tax on Rs 55 lakh and not on Rs 5 lakh (i.e. Rs 55 lakh – Rs 50 lakh). This is applicable even when there is more than 1 buyer or seller.
  • If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.
  • If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
  • This TDS has to be deposited along with Form 26QB within 7 days (30 days from 1.6.2016) from the end of the month in which TDS was deducted.
  • After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days.
  • Thus for paying TDS the buyer is required to file Form 26QB and the seller is required to obtain Form 16B.
  • In case of purchase of the property form Non-resident seller, the TDS has to be done u/s 195 and this section will not be applicable in such cases.

What is Form 26QB?

This TDS has to be made at the time of each credit/ payment to the seller’s account. Which in turn is to be deposited to the government account by way of a return cum challan (Form 26QB) within 30 days of the next month. In case if the buyer fails to deduct the taxes or deposit the same to the government account he will be considered as assessee in default and may get the notice for non-filing of Form 26QB.

What is Form 16B?

Form 16B is a TDS certificate for TDS deducted on a sale of property. Once the buyer makes the payment of TDS on behalf of the seller, a TDS certificate gets generated after a few days of making the payment. The buyer can then download this certificate also known as Form 16B and give it to the seller as a proof of TDS submission.

What are the Modes of Payment?

The payment of TDS can be made either of the following ways:

  • Online through the e-tax payment option
  • Online through net banking account of the deductor
  • Physically visiting and authorized bank branches

Duties of a Person Deducting TDS on Sale of Property

There are certain basic duties described below of person who is liable to deduct tax at source:

  • To obtain Tax Deduction Account Number also known as TAN and quote the same in all the documents pertaining to TDS.
  • To deduct the tax at source at the applicable rate.
  • To pay the tax deducted by him at the source to the credit of the Government by filing Form 26QB on or before the due date.
  • To file the periodic TDS returns.
  • To download and issue the TDS certificate or Form 16B to the payee in respect of tax deducted by him by the due date specified in this regard.

Is TAN Compulsory for a Person Responsible for Deducting TDS?

Yes, every person responsible for TDS is required to obtain TAN. Tax deduction and Collection Account Number is a ten-digit alpha-numeric unique identification number allotted to the deductor and must be quoted in all communication of the deductor thereby.

As the government has everything for everyone, for those who don’t have TAN under section 194IA, the payment of tax is to be filed with the help of Form 26QB and then issuing a certificate for tax deduction under Form 16B. Form 26QB is available in the e-payment section of Tax Information Network (TIN) of the Income Tax Department.

How to File Form 26QB?

Pay the TDS due along with the applicable interest and late filing fees and file the monthly return cum challan in Form 26QB for all the months wherein you have made any payments to the seller of the property.

Step 1: Payment through Challan 26QB (Online and Offline). Go to TIN website of the Income Tax Department.

Form 26qb Challan for Payment of TDS on Sale of Property Screenshot 1

Step 2: Click on “Form 26QB” and select “0020” if you are corporate payer and “0021” if you are a non-corporate payer (individuals). Fill in all the necessary details.

Form 26QB for Corporate Tax Payers Screenshot 1

Form 26QB for Corporate Tax Payers Screenshot 2

Step 3: There are 2 modes of payment at the bottom of the page: e-tax payment immediately (through net banking facility) and e-tax payment on a subsequent date (e-payment of taxes by visiting any of the Bank branches). Choose the one which you prefer and click on Proceed.

From 26QB - Select Mode of Payment

Note: If you choose net-banking, you will be able to login to your bank and pay online. After you have paid, the bank lets you print Challan 280 with a tick on 800 (i.e. payment of TDS on sale of property). Print this out and keep it safely.

If you cannot pay online, an online receipt for Form 26QB with a unique Acknowledgment Number is generated for you. This is valid for 10 days after generation. You can take this to one of the authorized banks along with your cheque. The bank will proceed with the online payment and generate your challan.

After you have submitted TDS to the government by filing Form 26QB, you need to generate and download Form 16B which is the certificate of TDS submitted. The process to generate Form 16B is given below:

How to Generate and Download Form 16B from the TRACES Website

Step 1: If you are a first-time user, register on TRACES as a Taxpayer with your PAN Card Number and the Challan number registered during payment.

Steps to Generate Form 16B

Step 2: Once you register, whether you are a seller or a buyer, you will be able to obtain your approved Form 16B. Check your Form 26AS seven days after payment. You will see that your payment is reflected in “Part F” under “Details of Tax Deducted at Source on Sale of Immoveable Property u/s 194(IA) [For Buyer of Property]”.

This gives you details such as TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgement number (which is the same as the one on your Form 26QB), date of deposit and TDS deposited.

Step 3: After your payment starts reflecting in Form 26AS, you can download your Form 16B. Login to TRACES, go to “Download” tab and click on Application for Request of Form 16B if the status of your Form 16B download request is “Available to download” your Form 16B.

Step 4: You should be able to see that the status of your Form 16B download request is Available. If status says Submitted, wait for a few hours more before repeating the last step. Download the “.zip file“.

Step 5: Open the “.zip file“. The password to open the Form 16B file is Date of Birth of Deductor (the format is DDMMYYYY). Your form will be available inside the .zip file as a pdf.

If you are the buyer, take a print out and issue it to the seller. If you are seller, keep the form safely with you.

How to File Form 26QB Correction?

The request for revision or correction can only be filed by the buyer and not by the seller. Hence, to file for Form 26QB follow the steps:

  • Login to the traces website as a taxpayer
  • Select option “online correction” under “26QB” tab to initiate correction request
  • Update the details which are required to be revised
  • Select the option to verify the request either through net banking / Digital Signature / AO approval
  • The form would be revised post verification

How to Verify Revision of Form 26QB?

In case the seller is known for correction of Form 26QB can be submitted for e-verification through net banking/Digital Signature/AO Approval and once the Form 26 QB is revised the buyer is bound to issue a new Form 16B to the seller.

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People also ask

Q. What are the consequences a deductor would face if he fails to deduct TDS or after deducting the same fails to deposit it to the Government’s account?

A. A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government’s account:

Levy of interest: As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the Government’s account then he shall be deemed to be an assesse -in-default and liable to pay simple interest as follows:

  • at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
  • at 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Levy of penalty: Penalty of an amount equal to tax not deducted or paid could be imposed under section 271C.

Q. What if the payer does not deduct tax at source, will the payee face any adverse consequences by means of action taken by the Income-tax Department?

A. It is the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee will not have to face any adverse consequences. However, in such a case, the payee will have to discharge his tax liability. Thus, failure of the payer to deduct tax at source will not relieve the payee from payment of tax on his income.

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