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Form 16B: TDS Certificate for Sale of Property

Updated on: 23 May, 2024 03:05 PM

Form 16B is a document that certifies the amount that is deducted at source during the sale of a property. This amount is deposited by the buyer to the income tax department. The amount which the buyer gives is deducted from the payment made to the seller. The payer is responsible for deducting the tax and paying the amount to the Government. The deductor has to furnish a TDS certificate called Form 16B. This article gets into the depth of Form 16B and its various aspects.

What is Form 16B?

Form 16B is a TDS certificate that is issued by the purchaser of an immovable property to the seller of the property under section 194IA. This certificate acts as proof of the tax deducted on the sales consideration. The deductor then deposits the amount deducted to the Income Tax Department. TDS is not deductible on immovable properties and agricultural land whose value is less than Rs.50 lakhs. The buyers of immovable property have to deduct TDS @1% of the sale value. It is deducted at the time of credit or payment.


Relationship of Form 26QB and Form 16B

When an individual pays TDS 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 a 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 TDS is given in installments, 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 sellers, 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. The same rule follows if the number of buyers increases.

Who is Eligible for Form 16B?

Any person who purchases an immovable property (excluding agricultural land) from a resident transferor for Rs.50 lakhs or more has to deduct a TDS @1%. After deducting the tax, he/she has to deposit the amount deducted with the Income Tax Department and issue a TDS certificate to the seller, which is known as Form 16B.


Components of Form 16B

The major components of Form 16B include –

  • Seller’s PAN
  • Assessment year
  • Payment acknowledgment number
  • Break up of salary
  • ITA Deduction
  • Reliefs under section 89

How to Generate and Download Form 16B From TRACES?

To generate Form 16B, you have to register with TRACES with various details. The details you have to submit while registering 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 the buyer from the download tab.
  • Furnish details such as assessment year, PAN of the seller, and acknowledgment number of Form 26QB.
  • Form 16B will be available to you in the requested downloads section under the ‘Download’ category.
  • Form 16 can be saved or printed as per your requirement.

Format of Form 16B

Below is the format of Form 16B as per the Income Tax Act

format of form 16B

Due Date for Form 16B

The deductor is required to furnish Form 16B to the payee within 15 days from the due date of providing Form 26QB. After this, Form 16b can be generated and downloaded from TRACES by following a few simple steps.


How to Download Form 16B From TRACES Portal?

Follow the below steps to download Form 16B from the TRACES portal -

  • Step 1. Log in to TRACES using your User ID, Password, PAN, and captcha. Ensure your User ID matches your PAN.
  • Step 2. Navigate to the Downloads section and select Form 16B/16C.
  • Step 3. Enter the required details:
    • Form Type: Select Form 26QB.
    • Assessment Year.
    • Acknowledgment Number.
    • PAN of the Landlord.
  • Step 4. Confirm the details of the Authorized Person, which are automatically filled from your TRACES profile. Click 'Submit'.
  • Step 5. Once submitted successfully, a Request Number will be generated.
  • Step 6. Go to the 'Downloads' tab to access requested downloads.
  • Step 7. Enter the Request Number or Request Date and click 'View Request'.
  • Step 8. If the status is 'Available', proceed to download the Form 16B PDF file. If it shows 'Submitted', wait for 24 to 48 hours for the status to change to 'Available'.
  • Step 9. Download the file by clicking the HTTP Download button.
  • Step 10. The downloaded file will be in zip format. Use the Buyer's Date of Birth in DDMMYYYY format as the password to open it.

How to Deposit TDS Payment?

To make the deposition of Tax Deduction at source easy, the income tax department is providing facilities for 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 proof of payment being done by the payer.

The process of offline submission of TDS is a little difficult. 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.


Can Form 26QB be Filed Without TAN?

Form 16B only requires the PAN of the 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 a TDS return in this condition without TAN.


Difference Between Form 16, Form 16A, and Form 16B

Here’s the difference between Forms 16, 16A, and 16B -

Form 16 Form 16A Form 16B
A TDS certificate for employees mentioning salary income and TDS dedutced A TDS certificate on income except salary A TDS certificate on income from the sale of property
Applicable only to salary income of employees Applicable to income from interest, dividends, commission, mutual funds, etc. Applicable to income from the sale of a building or land (other than agricultural land)
Issued by an employer to an employee Issued by the company or person who deducts tax on income earned except salary. Issued by a deductor (the buyer of land/property) to a seller
Issued yearly Issued every three months or quarterly Issued based on the number of transactions
Applicable for employees who earn over ₹2.5 lakh Eligible for those whose income (except salary) exceeds a certain threshold Eligible for each transaction exceeding ₹50 lakhs.

Conclusion

Each and every person who has a taxable income 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 has to be 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 remitting it. The tax deduction at source will be made at the rate of 1% of the total amount from the sale consideration.

If you have deducted TDS on any payment amount recently and filed the relevant forms, it is important for you to know that you also have to file an ITR and report the income from property sales in the ITR under the ‘capital gains’ section. However, ITR filing can be complicated and difficult, especially for laymen. If you need assistance with filing an ITR, you can connect with our tax experts and get CA-assisted ITR filing services.


Frequently Asked Questions

Q- What comes under section 194-IA?

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


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

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?

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?

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?

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
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.