From June 1st 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than Rs 50lakhs, he has to deduct TDS when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.
To find out what qualifies as agricultural land click here.
- The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.
- No TDS is deducted if sale consideration is less than Rs 50lakhs. If installments are being paid TDS has to be deducted on each installment.
- Tax is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55lakh, you have to pay tax on Rs 55lakh and not on Rs 5lakh (i.e. Rs 55lakh – Rs 50lakh). This is applicable even when there is more than 1 buyer or seller.
- If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.
- If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
- This TDS has to be deposited along with Form 26QB within 7 days from the end of the month in which TDS was deducted.
- After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.
- Thus for paying TDS the seller is required to obtain Form 16B and the buyer is required to obtain Form 26QB.
The steps to pay TDS and to obtain Form 16B (for the seller) or Form 26QB (for the buyer) are as follows:
Step 1: Payment through Challan 26QB (Online and Offline)
Click on Form 26QB and select 0020 if you are corporate payer and 0021 if you are a non-corporate payer. Fill in all the necessary details.
There are 2 modes of payment at the bottom of the page: e-tax payment immediately (through net banking facility) and e-tax payment on subsequent date (e-payment of taxes by visiting any of the Bank branches). Choose the one which you prefer and click on Proceed.
If you choose net-banking, you will be able to login to your bank and pay online. After you have paid, the bank lets you print Challan 280 with a tick on 800 (i.e. payment of TDS on sale of property). Print this out and keep it safely.
If you cannot pay online, an online receipt for Form 26QB with a unique Acknowledgment Number is generated for you. This is valid for 10 days after generation. You can take this to one of the authorized banks along with your cheque. The bank will proceed with the online payment and generate your challan.
Step 2: Generation of Form 16B or Form 26QB
If you are a first-time user, register on TRACES as a Tax Payer with your PAN Card Number and the Challan number registered during payment.
Once you register, whether you are a seller or a buyer, you will be able to obtain your approved Form 16B or Form 26QB. Check your Form 26AS seven days after payment. You will see that your payment is reflected in Part F under “Details of Tax Deducted at Source on Sale of Immoveable Property u/s 194(IA) [For Buyer of Property]”.
This gives you details such as TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgment number (which is the same as the one on your Form 26QB), date of deposit and TDS deposited.
Step 3: Download your Form 26QB or Form 16B
After your payment in Form 26AS has been reflected, login to TRACES. Go to the Download tab at the tab and click on Application for Request of Form 16B. For Form 26QB click on Application for Request of Form 26QB. To finish this process, fill in your 9-digit acknowledgment number and the details in Part F of your Form 26AS. This will generate an application request number and give you an application.
After a few hours your request will be processed. Click on the Downloads tab and select Requested Downloads from the dropdown menu.
You should be able to see that the status of your Form 16B or Form 26QB download request is Available. If status says Submitted wait for a few hours more before repeating the last step. Download the .zip file. The password to open the .zip file is Date of Birth of Deductor (the format is DDMMYYYY). Your form will be available inside the .zip file as a pdf. Print this out.
- It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000 or
- It is situated in any area within below given distance measured aerially:
|Population of the Municipality||Distance from Municipal limit or Cantonment Board|
|More than 10,000 but does not exceed 1,00,000||Within 2 kms|
|More than 1,00,000 but does not exceed 10,00,000||Within 6 kms|
|Exceeding 10,00,000||Within 8 kms|
Frequently Asked Questions
How are transactions of joint parties filed in Form 26QB?
The Form 26QB challan has to be filled by each buyer for every unique buyer-seller combination for their respective share. For example, in case of one buyer and two sellers, two forms have to be filled in. Similarly, if there are two buyers and two sellers, then four forms will have to be filled in.
I am a buyer. 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 has to be deducted by the buyer on the entire amount that is paid or credited to the seller when the amount exceeds Rs 50 lakh. For example, if a property is bought for Rs 70 lakh then TDS has to be deducted on the entire amount–that is Rs 70 lakh, not on just the Rs 20 lakh that exceeds the Rs 50 lakh threshold.
I am a buyer. How do I procure TAN to report the TDS on sale of property?
TAN is the Tax Deduction Account Number. Neither the buyer, nor the seller is required to procure the TAN for deducting TDS on the sale and purchase of the property. However, it is mandatory for the buyer to quote his or her PAN as well as the seller(s)’s PAN while deducting TDS on the purchase transaction.
I am a buyer. 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. It is buyer’s responsibility to acquire the PAN from the seller(s) before effecting the transaction.
How can I use the Form 26QB facility to pay TDS on the purchase of property?
The buyer of the property is the deductor of the tax. It is his or her responsibility to furnish the information regarding the transaction online on the TIN website. After successfully providing details of the transaction, the deductor can:
- Make the payment online immediately through the e-tax payment option
- Make the payment later on through the e-tax payment option or by visiting any of the authorized banks
If you make the payment through a bank, note that the bank will make the payment without digitization of any challan. The bank will get the challan details online from the form filed on www.tin-nsdl.com.
Do I have to file Form 26QB if the payment and registration of the property was done before May 2013?
Form 26QB is applicable on the purchase of properties after 1 July 2013. Hence, for properties where the formalities were completed before this date, there is no requirement to file Form 26QB.