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From 1st June 2013 through section 194IA of Income Tax Act a provision was rolled out by Mr. P Chidambaram to deduct 1% TDS on sale of the property to a resident IndianThe property here includes every immovable property like

And all such other properties except agricultural land. To the relief of citizens, TDS needs to be done only on the transactions where sale proceeds are of ? 50,00,000 (Fifty Lakhs) or more.

When and how much shall be the TDS on sale of the property?

The tax @1% needs to be deducted by the buyer at the time of making payment to the seller. And, the seller shall be entitled to receive only the net amount. For eg say the property is sold by Mr. A to Mr. B for ? 60,00,000. In this case, Section 194IA shall apply as under

Particulars Amount
Sale Value of Property ? 60,00,000
Less: Tax Deducted at Source by B u/s 194IA (@ 1% of ? 60,00,000) ? 60,000
Net Amount Payable to Mr A ? 59,40,000

What is Form 26QB and how deducted tax shall be deposited with the government?

The amount of ? 60,000 (Sixty Thousand) deducted as TDS by Mr.B shall be deposited to the government within 7days of next month in challan Form 26QB (TDS on Property).

What is the process to make payment of TDS or generate Form 26QB online?

To generate Form 26QB or make an online payment follow this process

  • Click on to access e payment of income tax. A screen as shown under will open up e-Payment of Taxes
  • Scroll down and select last left the most option of TDS on Property (Form 26QB) e-Payment of Taxes
  • A Screen as an image below will appear. You would be required to fill in the details relating to
    1. Taxpayer Info
    2. Address
    3. Property Details
    4. Payment Info
    Form 26QB
  • Some of the details on home page i.e. taxpayer info will be auto-populated like
    1. Financial Year
    2. Assessment Year
    3. Name & Status of Transferee
    4. Name & Status of Transferor

Where is TDS deducted on property seen by the seller?

TDS so deducted will reflect in Form 26AS Part F, as shown in the image below

Form 26AS

What is TDS form 16B?

The Buyer Mr. B in our case shall also give Certificate of TDS so Deducted in Form 16B to the seller Mr. A. To generate Form 16B certificate follow these steps

On which amount TDS shall be deducted for sale of the property covered u/s 194IA?

TDS under Section 194IA needs to be deducted on transaction value and not on value inclusive of applicable taxes. Say, the property is sold at ? 60,00,000 and GST applicable on it is ? 6,00,000. In this case the TDS u/s 194IA would be deducted on ? 60,00,000 and not on ? 66,00,000.

TDS rule was brought to effect so as to keep a track of transactions of sale and purchase in real estate. As it is a highly speculative market where transactions are done a party in cash and partly through baking channels.

To know more about TDS on sale of the property toNRIand all FAQ’s on TDS on sale of property read our series of blogs.

Frequently Asked Questions

Q- I forgot to deduct TDS when I purchased a property. What should I do now?

Ans. Taxpayer will be liable to pay Penalty Rs. 100000/-

Q- How can I get Form 26QB online?

Ans. It can be generated by login into Traces site.

Q- Who has to pay TDS on sale of property?

Ans. Buyer has to deduct TDS on payment of consideration to the seller.

Q- I am a buyer. Should I deduct TDS on the amount exceeding the property value of Rs 50 lakh or the entire amount at which I have bought the property?

Ans. TDS on the entire amount of consideration if property value exceeding Rs. 50 lakh.

Q- I am a buyer. How do I procure TAN to report the TDS on sale of property?

Ans. Neither the buyer, nor the seller is required to procure the TAN for making TDS payment on the purchase of immovable property.

Q- I am a buyer. What should I do if I don’t have the PAN of the seller(s)?

Ans. The seller(s)’s PAN is mandatory for deducting TDS and filing Form 26QB.You are required to take selers PAN before hand.

Q- How can I use the Form 26QB facility to pay TDS on the purchase of property?

Ans. 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.

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CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of 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.