Form 26QB: TDS on Purchase of Immovable Property

Under The Income Tax Act, 1961, 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.

What is Form 26QB?

According to Budget 2022 plans, section 194-IA will be amended to include the stamp duty value of such property in the calculation of TDS. TDS of 1% will be calculated on the sale based on the property's stamp duty value, whichever is higher.
The property here includes every immovable property like:

• House Property
• Commercial Property
• Plot or unconstructed land

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

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

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, then under the new amendment, 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.

How deducted tax shall be deposited with the government in form 26QB?

The amount of Rs.65,000 (Sixty Thousand) deducted as TDS by Mr B shall be deposited to the government within 7 days of the next month in challan Form 26QB (TDS on Property).

Points to Remember: Purchaser of the Property

1. Tax at the flat rate of 1% must be deducted from the sale consideration.
2. The purchaser must collect the PAN of the seller ensure that it is verified.
3. The PAN cards of both purchaser’s and seller’s must be there in the online form.

Points to Remember: Seller of the Property

1. You must provide your purchaser with the PAN card so that information in regards to the TDS can be furnished to the IT Department.
2. You should ensure that the purchaser verifies the taxes that have deducted in Form 26AS.

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

The below process can be used to fill form 26QB, right from generating form 26QB to making payment online.:

1. Click on https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp to access e-payment of income tax.
2. Scroll down and select TDS on Property (Form 26QB)
3. You would be required to fill in the details relating to:

   - Taxpayer Info
   - Address
   - Property Details
   - Payment Info

   Some of the details on home page i.e., taxpayer info will be auto-populated:
   - Financial Year
   - Assessment Year
   - Name & Status of Transferee
   - Name & Status of Transferor

   
   
   
4. Submit the duly filled form to proceed. ?A confirmation screen appears. After confirming, a screen appears showing two buttons as "Print Form 26QB" and "Submit to the bank". A unique acknowledgement number is also displayed on the screen. It is advisable to save this acknowledgementt number for future use.
   ??Click on "Print Form 26QB" to print the form. Then click on "Submit to the bank" to make the required payment through internet banking. Then proceed to the payment page through the internet banking facility of various banks.
5. On successful payment, a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment? being made.

Where can the TDS deducted on the property be seen by the seller?

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

What is TDS form 16B?

The Buyer Mr B in our case shall also give Certificate of TDS deducted in Form 16B to the seller. follow these simple steps

• Login to TRACES website https://www.tdscpc.gov.in/app/login.xhtml
• Next got to the Downloads section
• From the list select Form 16B
• Enter all the details as required, and click on "Go”

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

TDS under Section 194IA needs to be deducted on the total value including stamp duty 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.