Basic provision of the section 194-IA

Various regulations of sale of property are stated in this section for which tax deduction at source is to be applied and this certificate has to be furnished. They are as follows:

  • Under this section immovable property is transferred.
  • Any property like land, building, part of building and so on comes under immovable property. Agricultural land is excluded from this category.
  • Buyer pays the consideration during sale of such property.
  • Sale consideration should be for Rs 50 lakh or more.
  • The purchaser must deduct tax deduction at source (TDS) at the rate of 1% at the time of payment.
  • TDS will be charged at the rate of 20% if the seller does not provide the details of PAN as per section 206AA.
  • Pan card of the buyer and seller is mandatory.

Note: Form 26QB should be filed vigilantly as there is no rectification process for any mistake and can only be corrected by contacting Income tax department.


Relationship of Form 26QB and Form 16B

When an individual pays tax deduction at source to the Government , he or she will get a challan or return under section 26QB. This is an electronically furnished document for tax deducted under section 194-IA. The Form 26QB should be filled correctly as there is no procedure to rectify the mistakes once the form is filled completely. Once this form is filled no changes can be made without contacting the income tax department directly. This form is important and further required to obtain Form 16B. There are few norms that are to be followed for this form. They are:

  • The form 26QB should be filed within a period of 30 days following the month of deduction.If in case the tax deduction at source is given in instalments, Form 26QB should be furnished for each installment.
  • Form 26QB is made for each buyer and seller combination. For example, if there is one buyer and three seller, Form 26QB will be made for each seller and buyer like seller 1 and buyer, seller 2 and buyer and seller 3 and buyer separately. Same rule follows if the number of buyers increases.

How to generate and download Form 16B?

To generate Form 16B you have to register with TRACES with various details. The details you have to submit while registration are your PAN details, details of tax deduction or details of challan or details of Form 26QB. Enter the verification code and then proceed. The activation link will be sent to you by email. To proceed further follow the steps:

  • If already registered no need to register yourself again. Use the same login details.
  • Login with PAN and password.
  • Select Form 16B for buyer from download tab.
  • Furnish details such as assessment year, PAN of the seller, acknowledgement number of the Form 26QB.
  • Form 16B will be available to you on request for downloads.
  • Form 16 can be saved or printed as per your requirement.

Format of form 16B

Below is the format of form 16B as per income tax act:

format of form 16B

Due date for Form 16B

For furnishing Form 26QB, the deductor must issue Form 16B to the payee within a period of 15 days of expiry of due date.After this Form 16 can be generated and downloaded from TRACES by following the simple steps.


How to deposit TDS payment?

To make the deposition of Tax Deduction at source easy, the income tax department is providing facilities of online submission of the amount. The taxpayers can deposit their TDS amount online. Internet banking facilities are also available for various users. When the transaction is done online, a counterfoil will be displayed with CIN, bank details and payment details which is the proof of payment being done by the payer.

If submission has to be done offline by the taxpayer then the procedure is little tedious. After getting Form 26QB, a challan can be printed and the payment of tax deduction at source can be deposited at any authorized bank by means of cheque or draft.


Form 26QB can be filed without TAN

Form 16B only requires PAN of deductor and deductee therefore Form 26QB can be filed without TAN.
The transactions can be done by furnishing a separate return challan Form 26QB to file TDS return in this condition without TAN.


Conclusion

Each and every person who has an income to be taxed is liable to pay tax to the Government. The assessee is also responsible to file an income tax return for the same. The income tax act states the deduction of tax at source itself to make the taxation simple as well as avoid tax evasion at various steps. The tax that is deducted at source can be deducted from the total tax liability and the balance will be payable by the taxpayer.
For such taxation policy, a TDS certificate is being furnished by the deductor for the deductee named as Form 16B during the payment of tax deduction at source for sale of property to the Government . This payment is done by the buyer and he deducts this amount from the total payment of the seller before giving him. The tax deduction at source will be made at the rate of 1% of the total amount from the sale consideration.

Frequently Asked Questions

Q- What comes under section 194-IA?

Ans. Regulations regarding sale of property is stated under section 194-IA.


Q- Who pays TDS in case of sale of property?

Ans. The buyer has to deduct the payment of Tax Deduction at Source from the total amount to be paid to the seller before making the complete payment. The TDS is deducted will be deposited to the income tax department by the buyer.


Q- Can the seller file return of the TDS he paid?

Ans. Yes, the seller can file a tax return in place of the TDS paid by the buyer and get deduction in his total tax to be payable. He has to furnish Form 16B given to him by the buyer to get the return of the tax deduction at source.


Q- What is immovable property under section 194-IA?

Ans. All the property like land, building or part of building except agricultural land that is immovable comes under immovable property under this section.


Q- At what rate TDS is paid for sale of property?

Ans. The rate at which the tax deduction at source is to be deducted by the buyer is 1% for sale of property on behalf of the seller.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.