Form 16B – TDS Certificate for Sale of Property – Download from Traces

Form 16B is a certificate issued to the seller of the immovable property by the buyer. This statement is proof that TDS has been deducted from the sale value or the stamp duty value of the immovable property. It is the responsibility of the payer to deduct tax (TDS) and pay it to the credit of the government.

TDS Deduction and Form 16B

• When a buyer purchases an immovable property (other than agricultural land), they pay the seller the sale consideration after deducting the TDS.
• The TDS deducted is 1% of the higher of the Stamp Duty Value (SDV) or the sale consideration.
• The TDS amount collected by the buyer is deposited with the government. TDS is not deducted on the sale of the immovable property if the value of both the sale consideration and the SDV is less than Rs 50 lakh.
• For such tax deductions, obtaining a Tax Deduction and Collection Account Number (TAN) is mandatory.
• The deductor also has the responsibility of filing a Tax Deducted at Source (TDS) return, providing particulars of deductees, nature of the payment made, tax deducted, rate at which it is deducted, etc., for every quarter of a financial year.
• The TDS return cum challan filed by the deductor is called Form 26QB, which is submitted to the Income Tax department by the deductor to claim the TDS credit.
• In addition to filing such returns, the deductor must provide a TDS certificate to the deductee for the tax deducted.
• Form 16B is one of the TDS certificates to be issued by the deductor under the Income-tax Act, 1961, to the deductee in respect of TDS deposited to Government. 

In this article, we have discussed provisions relating to Form 16B.

Contents of Form 16B

The Form 16B includes the following: 

• Deductors and Deductee name and address
• Deductors and Deductee PAN number
• Assessment year
• Payment acknowledgement number
• Amount paid/credited
• Verification

Due Date for Issuance of Form 16B

Deductor shall issue Form 16B to the payee within 15 days from the due date for furnishing Form 26QB and Form 16B can be generated and downloaded from TRACES (TDS Reconciliation Analysis and Correction Enabling System). 

Penalty for Non-Issuance of Form 16B

A penalty of Rs 500 per day is imposed from the due date of issuing Form 16 B till the date failure continues.

Form 26QB

Form 26QB is a return cum challan for payment of TDS to the Government which shall be furnished electronically for tax deducted under Section 194-IA. 

Due date 
Form 26QB shall be furnished within 30 days from the end of the month in which the deduction is made. For example, if payment/credit is made on 16th April, Form 26QB shall be furnished by 30th May. 

Installments
In case of payment/credit in installments, as TDS is required for each installment, Form 26QB shall also be furnished for each such deduction. 

Multiple parties to transaction
Form 26QB shall be furnished for each buyer and seller combination. 

Example 1: If there one buyer, B1 and 2 sellers, S1 and S2, Form 26QB shall be furnished separately for B1 and S1 combination and B1 and S2 combination, hence overall two 26QB to be filed. 

Example 2: In example 1 above, if the second buyer, B2 is also added, Form 26QB shall be furnished separately for B1 and S1 combination, B1 and S2 combination, B2 and S1 combination and B2 and S2 combination, hence overall 4four 26QB to be filed.

Penalty

The deductor has to pay the penalty of Rs 200 per day for the delayed days after the due date for not furnishing the Form 26QB. The amount of the penalty fee cannot exceed the total amount of the TDS deducted.

Nature of Tax Deduction and Person Responsible to Deduct Tax

Provisions of section 194-IA are:

• There is a transfer (other than cases of compulsory acquisition) of immovable property
• Immovable property means land/building/part of the building but excluding agricultural land.
• Buyer is responsible for paying consideration to the resident seller in respect of such transfer
• TDS is deducted on transfer of immovable property for a consideration and stamp duty value of Rs 50 lakhs or more
• Buyer must deduct tax at the rate of 1% of the higher value of the sale consideration or the SDV either at the time of credit or payment, whichever is earlier.
• If the seller does not provide for PAN, TDS is deducted at the rate of 20% as per Section 206AA

What if the Payer Does Not Possess TAN?

As mentioned above, obtaining TAN is mandatory for all deductors to be able to deduct TDS and pay it to the Government. It is also necessary to quote TAN in all communication with the Income-tax (TDS) department. TDS is required to be paid by using Challan No. – ITNS 281. However, in case of transfer of immovable property transactions, individuals may be parties to the transaction in most cases they are unable to use Challan No. ITNS 281 without TAN and obtaining TAN for one-off transaction is not feasible.

Hence, deductors under Section 194-IA has been provided with an exception and they can file TDS return without TAN and a separate Return cum Challan Form 26QB has been provided to facilitate deductors without TAN to file TDS return for the purpose of Section 194-IA.

Depositing TDS Amount

Once the challan is printed, the tax amount is deposited as a cheque or demand draft. When the taxpayer opts to pay at a bank, he/she will be redirected to the bank’s official payment page. Once the amount is paid, a challan counterfoil with CIN, payment details, bank’s name, etc. is displayed. This counterfoil acts as proof of payment. After this, taxpayers can proceed to the TRACES portal after 5 days and download Form 16B.

Form 26AS – It takes 7-15 days from TDS filing, for the tax credit to have appeared in Form 26AS of the seller.

Procedure to Generate and Download Form 16B from TRACES

• Click here to register as taxpayer on TRACES with details of PAN and either detail of tax deducted or details of challan or details of Form 26QB. Also, enter the verification code and click on ‘Proceed’. Activation link will be sent to email id through which account can be successfully created
• If already registered login to TRACES here with username as ‘PAN’ and password
• Under downloads tab Select ‘Form 16B (For Buyer)’
• Furnish details such as assessment year, acknowledgment no. of the Form 26QB and PAN of the seller
• Form 16B will now be available on requested downloads section under Downloads category
• Form 16B can now be printed/saved

Below is the Screenshot of Form No. 16B.

Difference Between Form 16, Form 16A, and Form 16B

The differences between Form 16, 16A and 16B are given below:

Particulars	Form 16	Form 16A	Form 16B
Who issues it?	Issued by the employer	financial institutions, tenants, etc.	Issued by property buyers to sellers.
Who is it directed at?	Directed towards salaried employees.	Directed towards non-salaried employees	Directed towards property sellers.
Purpose	Form 16 is issued for TDS on salary.	Form 16A is issued on income generated through non-salary sources such as securities, returns on investment, rent, or interest on FD.	Form 16B is issued for TDS on earnings generated through the sale of immovable property.
Components	Proof of Income Employer’s PAN and TAN Employee’s PAN Tax paid on behalf of employees Payment acknowledgment number Surcharges and education cess	Deductor’s PAN and TAN Deductee’s PAN Amount of Tax paid The receipt number of TDS paid	Deductor’s PAN and TAN Deductee’s PAN Assessment year Acknowledgment number of Form 26QB Amount paid/credited
Section under IT Act	Section 203 of the Income Tax Act.	Section 203 of the Income Tax Act.	Section 194-IA of the Income Tax Act