TDS on Sale of Immovable Property Under Section 194IA

When and how much TDS should be deducted on the sale of 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:

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

Form 26QB is a challan-cum-statement used to pay TDS on the sale of immovable property. When a buyer purchases property worth ₹50 lakh or more, they must deduct TDS at 1% of the sale consideration and remit it to the government.

Here's how the deducted tax should be deposited:

To pay TDS on property through Challan 26QB and obtain Form 16B for the seller, follow these steps:

• Log into your account using the Income Tax e-filing portal. From the "e-File" section, choose "e-Pay Tax."
• Click on “+ New Payment,” then proceed by selecting "26QB- TDS on Property."
• Enter Required Details:
  • Buyer’s Information: The portal will auto-fill your details. Double-check and make edits if necessary.
  • Seller’s Information: Add the seller’s PAN and address.
  • Property Information: Include specifics about the property, such as type, location, sale date, and sale value. The system will calculate the tax due.
  • Payment Details: Choose a payment mode, then complete the payment. A challan will be generated after successful payment.
• If you’re a first-time user, register as a taxpayer on the TRACES portal using your PAN and challan details.
• Seven days after payment, check Form 26AS under "Tax Deducted at Source on Sale of Immovable Property." Part F will provide the TDS certificate number, transaction date, and other related details.
• Once your payment appears in Form 26AS, log into TRACES, navigate to the “Download” section, and select “Form-16B (for the buyer).” Enter the seller’s PAN and transaction acknowledgment number, then submit your request.
• After a short processing period, your Form 16B request will be ready. Download the ".zip" file, which is secured with the deductor’s date of birth in the format DDMMYYYY as the password. Inside, you’ll find the PDF of Form 16B, ready for printing.
• Follow these steps to complete your TDS payment and obtain Form 16B for your property transaction records.

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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

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What is TDS form 16B?

Form 16B is a TDS (Tax Deducted at Source) certificate issued by the buyer of an immovable property to the seller. It certifies that the TDS amount deducted from the payment made for the purchase of the property has been deposited with the Income Tax Department.

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

Under Section 194IA of the Income Tax Act, TDS (Tax Deducted at Source) is to be deducted at 1% on the sale consideration of the property. This applies to the total amount paid or credited to the seller or the stamp duty value of the property, whichever is higher.

Here are some key points:

• Threshold: TDS is applicable if the property value exceeds ₹50 lakhs.
• Rate: 1% of the sale consideration or stamp duty value, whichever is higher.
• Exclusions: Agricultural land is not covered under this section.
• Payment: TDS must be deposited with the Central Government within 30 days using Form 26QB.

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