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Form 26QB: TDS on Purchase of Immovable Property

Updated on: 16 Jan, 2024 05:49 PM

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.

What is 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.

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. 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.

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 30 days from the end of the 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 to ensure that it is verified.
  3. The PAN cards of both purchasers and sellers 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 regard to the TDS can be furnished to the IT Department.
  2. You should ensure that the purchaser verifies the taxes that have been deducted in Form 26AS.

In Case of more than 1 buyer or seller

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.

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

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

  1. Click on to access e-payment of income tax. e-Payment of Taxes
  2. Scroll down and select TDS on Property (Form 26QB) e-Payment of Taxes
  3. You would be required to fill in the details relating to:
    - Taxpayer Info
    - Address
    - Property Details
    - Payment Info
    Some of the details on the home page, i.e., taxpayer info, will be auto-populated:
    - Financial Year
    - Assessment Year
    - Name & Status of Transferee
    - Name & Status of Transferor
    Form 26QB
    Form 26QB
    Form 26QB
  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 26AS Part F, as shown in the image:

TDS deducted will reflect

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

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 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.

Frequently Asked Questions

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

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

Q- How can I get Form 26QB online?

It can be generated by login into the Traces site.

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

The buyer has to deduct TDS on payment of consideration to the seller.

Q- 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?

TDS on the entire amount of consideration or the stamp duty value, whichever is higher, if property value exceeds Rs. 50 lakh.

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

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

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

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

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

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.

Q- Can I amend form 26 QB?

Yes , corrections under 26QB are possible, to understand in detail, click here

Q- What is the date of deduction in Form 26QB?

Date of deduction refers to the date on which TDS has been deducted by buyer.

Q- How to download Form 26QB?

To download 26QB, one needs to have following details:- PAN of Buyer & Seller, Acknowledgement no. of 26QB.
To download 26QB, visit, here click onto Services tab and in it select TDS on the sale of property.,
download 26QB
On clicking onto this, a new page will open which ask for certaindetails and submission of such details 26QB will be made available.
certaindetails and submission

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 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.