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Under The Income Tax Act, 1961, a few key rules regarding sale and purchase of immovable property have been laid out. Such transactions are covered under Section 194-IA. The buyer of property, also known as the deductor, is required to deduct TDS from the consideration payable to the property seller. This is required if the transaction value is more than Rs. 50 lakhs, and the deductor is required to issue Form-16B to the deductee (seller). All such requirements for Form-26QB have been listed under Section 194-IA. So in this guide, we have explored everything that you need to know about form 26QB.
Any person or HUF purchasing a property valued at least Rs. 50 lakhs must deduct from TDS. According to section 194IA of the Income Tax Act, TDS is applicable. The property here includes every immovable property like
And all such other properties except agricultural land. TDS needs to be deducted only on the transactions where sale proceeds are Rs.50,00,000 (Fifty Lakhs) or more.
TDS is to be deducted from the stamp duty value of the property if it is more than the sale value. For example, if Mr. B purchased a property from Mr. S for a sum of 60 Lacs, but the stamp duty value of such property is 65 Lacs. Under the new amendment, a TDS of 1% will be calculated and deducted on a total of 65 Lacs, i.e., 65,000/-, and Mr. B will be paid 59.35 Lacs.
The amount of Rs.65,000 (Sixty Thousand) deducted as TDS by Mr. B shall be deposited to the government within 30 days from the end of the month in challan Form 26QB (TDS on Property).
If more than One Buyer or Seller: Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective shares. For example, in the case of one buyer and two sellers, two challans and Form 26QB have to be filled in, and in the case of two buyers and two sellers, four challans and Form 26QB have to be filled in for the respective property shares, for the application of Section 194-IA total value of the property will consider, not the respective share of the buyer and seller. For E.g Property is purchased by two buyers/sellers and the property value is ₹ 80 Lakhs, So the sale consideration respective share of buyer/seller is ₹ 40 Lakhs each (below ₹ 50 Lakhs) but as per rule total value of the property will consider, so Section 194-IA is applicable.
The below process can be used to fill form 26QB, from generating form 26QB to making payment online.:
TDS deducted will reflect in Form 26AS Part F, as shown in the image:
The Buyer Mr B in our case shall also give Certificate of TDS deducted in Form 16B to the seller. follow these simple steps
TDS under Section 194IA needs to be deducted on the consideration,Sell value or stamp duty value, more, and not on the value inclusive of applicable taxes. Say, the property is sold at Rs. 60,00,000 and GST applicable on Rs. 6,00,000. In this case the TDS u/s 194IA would be deducted on Rs. 60,00,000 and not on Rs. 66,00,000.
TDS rule was brought to effect to keep a track of transactions related to the sale and purchase in the real estate sector. This was done because it is a highly speculative market where transactions are done partly in cash and partly through baking channels. This change will also assist the government in clearly recognising instances in which a property is purchased for less than its stamp value.
Taxpayers will be liable to pay Interest @1% as the case may be and a penalty which may extend to Rs.100000/- under section 271H.
| Condition | Penalty |
|---|---|
| Non-deduction of TDS | Penalty of 1% interest on the amount not deducted for TDS |
| Non-remittance of TDS to the government | Penalty of 1.5% of the deducted amount per month |
| Delay in filing of TDS returns | Penalty of Rs. 200 per day for each day of default |
It can be generated by login into the Traces site.
The buyer has to deduct TDS on payment of consideration to the seller.
TDS on the entire amount of consideration or the stamp duty value, whichever is higher, if property value exceeds Rs. 50 lakh.
Neither the buyer, nor the seller is required to procure the TAN for making TDS payment on the purchase of immovable property.
The seller(s)’s PAN is mandatory for deducting TDS and filing Form 26QB.You are required to take seller’s PAN beforehand.
Visit NSDL site , then choose TDS on sale of property. After that fill all the details, make payment and take a print of Form 26QB generated and submitted to the bank.
Yes , corrections under 26QB are possible, to understand in detail, click here
Date of deduction refers to the date on which TDS has been deducted by buyer.
To download 26QB, one needs to have following details:- PAN of Buyer & Seller, Acknowledgement no. of 26QB.
To download 26QB, visit https://www.tin-nsdl.com/index.html, here click onto Services tab and in it select TDS on the sale of property.,
On clicking onto this, a new page will open which ask for certaindetails and submission of such details 26QB will be made available.
