Maximize Your Income Tax Refund
File Your Taxes with the Experts

Start Today

  • TrustedTrusted by 1 Million+ Users
  • User Rating4.8 Star User Rating
  • Secure2500 Cr. Taxes Saved Already
Maximize Your Income Tax Refund

Form 26QB: TDS on Purchase of Immovable Property

Updated on: 23 Jul, 2024 04:01 PM

Under The Income Tax Act 1961, a few key rules regarding the sale and purchase of immovable property have been laid out. Such transactions are covered under Section 194-IA. The buyer of the 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 ₹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 explore everything that you need to know about form 26QB.

Budget 2024 Update

FM Nirmala Sitharaman has made two announcements for those opting for the new tax regime.

First, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-.

Second, in the new tax regime, the tax rate structure is proposed to be revised, as follows:

  • 0-3 lakh rupees - NIL tax
  • 3-7 lakh rupees - 5% tax
  • 7-10 lakh rupees - 10% tax
  • 10-12 lakh rupees - 15% tax
  • 12-15 lakh rupees - 20% tax
  • Above 15 lakh rupees - 30% tax

As a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500/- in income tax.

What is Form 26QB?

Any person or HUF purchasing a property valued at least ₹50 lakhs must deduct TDS @1% from the stamp duty value or the sum of property, whichever is higher. According to section 194IA of the Income Tax Act, TDS is applicable on the purchase of immovable property. 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 TDS shall be deducted 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. Also, if the value of the property exceeds ₹50 lakhs, the TDS is deducted on the entire amount and not just on the amount over and above ₹50 lakhs. 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. In this example, the TDS will be calculated on ₹65 lakhs and not on ₹15 lakhs (65,00,000 - 50,00,000). 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.

If you find calculating the TDS amount complicated, you can contact our tax experts, who can help you calculate the TDS amount and file TDS returns. Book an Online CA Now!

How shall tax deducted at the source be deposited with the government in Form 26QB?

The amount of Rs.65,000 (Sixty Five 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 seller’s PAN 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 one 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., if Property is purchased by two buyers/sellers, and the property value is ₹ 80 Lakhs, the sale consideration respective share of buyer/seller is ₹ 40 Lakhs each (below ₹ 50 Lakhs), but as per rule, the total value of the property will consider, so Section 194-IA is applicable.

File ITR

What is the process for Making a payment for TDS or generating Form 26QB Online?

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

  • Step 1: Go to the official Income Tax website and log in to your account.
    Income Tax website
  • Step 2: Navigate to the 'E-file' section, select 'e-pay Tax,' and then click the 'Proceed' button for '26QB (TDS on sale of the property)' in the 'New payment' section.
  • Step 3: Fill in three pages with the necessary information, including buyer and seller basic details, property details, tax deposit details, the amount credited or paid, address details, and communication/contact details, as well as the residential status of the seller.
    Fill in three pages with the necessary information
  • Step 4: On the following page, choose your preferred payment mode: 'Pay later' or 'Pay Now'.
    choose your preferred payment mode
  • Step 5: Click on 'Pay Now' to proceed with paying the required TDS amount. After payment, the Form 26QB acknowledgment will be generated and can be downloaded.
  • Step 6: Once Form 26QB is processed, you can generate the TDS Certificate from the TRACES Portal by logging in as a Tax Payer.
    Click on Pay Now

How to Download Form 26QB?

To learn how to download Form 26QB, follow these steps:

  • Step 1: Go to the official Income Tax Website and log in. Then select 'e-file' followed by 'e-pay taxes.'
    Income Tax Website
  • Step 2: Choose 'Payment history.' If Form 26QB has already been filed, you will find an entry under the type of payment labeled 'TDS on Sale of Property (800)'. Under 'Action,' you will see the option to download the receipt or statement of Form 26QB.
    Payment history

    Here's a sample of Form 26QB for your reference.
    Form 26QB

Where can the TDS Deducted on the Property be Seen by the Seller?

TDS deducted will be reflected 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 a 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 based on the consideration, sale value, or stamp duty value and not on the value inclusive of applicable taxes. Say the property is sold at ₹60,00,000, and GST is applicable on ₹6,00,000. In this case, the TDS u/s 194IA would be deducted from Rs. 60,00,000 and not from Rs. 66,00,000.

TDS was brought to introduced 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 banking channels. This change will also assist the government in clearly recognizing instances in which a property is purchased for less than its stamp value.

If you are the seller who has deducted TDS, you need to file a TDS return. The deductors should file a TDS return on time to avoid penalties. Tax2win’s tax experts can help you file TDS returns accurately and ensure a smooth tax filing journey. Book eCA consultation Now!

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 A 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 logging 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 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 the 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?

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

Q- What is total value of consideration in form 26QB in case of joint property?

The total value of consideration in Form 26QB for joint property is the entire sale consideration of the property, not each owner's share. It doesn't matter if the ownership is divided - the TDS applies to the total property value if it exceeds Rs. 50 lakh.

Q- When is the deadline to file Form 26QB and deposit the TDS?

The deadline to file Form 26QB and deposit the TDS is within 30 days from the end of the month in which you deducted the TDS from the property seller's payment.

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.