How to file TDS on the Sale of Property

From 1 June 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 50 lakhs, he has to deduct tax at source (TDS) when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.

1. Requirements of section 194IA

Here are the requirements of this section:

• 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 required to be deducted if sale consideration is less than Rs 50 lakhs. If the payment is made by instalments, then TDS has to be deducted on each instalment paid.
• The union budget 2019 has proposed a definition for “consideration for immovable property” to include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of the immovable property. This is applicable for immovable property purchased on or after 1 September 2019.
• TDS is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55lakh, you have to pay TDS on Rs 55 lakh and not on Rs 5 lakh (i.e. Rs 55 lakh – Rs 50 lakh). This is applicable even when there is more than 1 buyer or seller.
• Post the budget 2019 amendment to section 194-IA, in the above example, if on 1 September 2019, you have paid Rs 2 lakh towards parking fee, Rs 1 lakh for water facility fee and Rs 1 lakh for electricity fee, your sale consideration would be Rs 59 lakh (55+2+1+1). You will have to pay TDS on Rs 59 lakh @ 1%. Your TDS payable would be Rs 59,000.
• The buyer of any immovable property need not obtain a TAN (Tax Deduction Account Number) for making payment of the TDS on immovable property. You can make the payment using your PAN.
• For the purpose of making payment of TDS on immovable property, the buyer has to obtain the PAN of the seller, else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment (including instalment payments) or at the time of giving credit to the seller, whichever is earlier.
• The TDS on immovable property has to be paid using Form 26QB within 30 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 in form 16B to the seller. This is available around 10-15 days after depositing the TDS.
• The buyer is required to obtain Form 16B and issues the form to the seller. You can check the procedure to generate and download Form16B from TRACES here.

2. Steps to pay TDS through challan 26QB and to obtain Form 16

The steps to pay TDS through challan 26QB and to obtain Form 16B (for the seller) are as follows:

Step 1: Payment through Challan 26QB (Online and Offline)

Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp.

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 the 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 safe.

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: Register in TRACES

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, you will be able to obtain approved Form 16B (TDS certificate) and you can issue this Form to Seller. 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 Immovable Property u/s 194(IA) [For Buyer of Property]”. Part F information is not available for Claim in ITR of the buyer.

This gives you details such as TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgement number (which is the same as the one on your Form 26QB), date of deposit and TDS deposited.

Step 3: Download your 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 “Form-16B (for the buyer)”.

To finish this process, fill PAN of the seller and acknowledgement number details pertaining to the property transaction for which Form-16B is to be requested and click on “Proceed”.

Verify all the details once and click on “Submit request”.

After a few hours, your request will be processed. Click on the Downloads tab and select Requested Downloads from the drop-down menu.

You should be able to see that the status of your Form 16B download request is Available. If the 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.

Notes

A land is not treated as agricultural land if:

• It is situated within the 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:

3. Notice for non-filing Form 26QB

The income tax department receives an Annual Information Return (AIR) from the registrar/sub-registrar office regularly. From this report, the department can figure out if you have made a property transaction exceeding Rs.50 lakh. If the buyer has not deducted tax at source at 1% of the transaction amount or not filed TDS within the specified time, the IT department will send a notice to the buyer.

Sample Notice received by taxpayer

Sub: CPC (TDS) Follow up: 26QB Statement not yet filed for Purchase of Property during FY 2013-14

Date of communication: 05/04/2016

Dear Buyer of Immovable Property, PAN(XXXXX1234X),

As per the information received in Annual Information return (AIR) through Registrar/Sub-registrar, you have executed a transaction for the purchase of immovable property exceeding Rs. 50 Lakhs (Rupees Fifty Lakhs) during Financial Year 2013-14. However, TDS Statement in Form 26QB has not yet been filed by you. In this regard, your urgent attention is invited to the following, with respect to the filing of TDS Statement in Form 26QB and Issuance of TDS Certificates in Form 16B downloaded from TRACES.

1. Mandatory Filing of Form 26QB:

As per Finance Act of 2013, TDS is applicable on transfer of immovable property, wherein the consideration of the property exceeds or is equal to Rs 50 Lakhs. Sec 194 IA of the Income Tax Act, 1961 read with Rule 30, 31 & 31A of Income Tax Rules states that:

a. For all such transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration.

b. Tax so deducted should be deposited to the Government Account through e-tax Payment option (Netbanking) or any of the authorised bank branches. Any sum so deducted under section 194-IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made.

c. PAN of the seller, as well as Purchaser, should be mandatorily furnished in an online form (Form 26QB) for furnishing information regarding the property transaction. Facility for furnishing information regarding the transaction of sale of immovable property and payment of TDS thereof is available on the website www.tin-nsdl.com (http://www.tin-nsdl.com/).

d. TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account. Form 16B will be available for download by registering on the website of Centralized Processing Cell (TDS) www.tdscpc.gov.in (http://www.tdscpc.gov.in/).

2. Issuance of TDS Certificates in Form 16B downloaded from TRACES:

* It is mandatory for all buyers to issue TDS certificates after generating and downloading the same from TRACES,” TDS Reconciliation Analysis and Correction Enabling System”(www.tdscpc.gov.in (http://www.tdscpc.gov.in/). The TDS Certificates downloaded only from TRACES Portal will hold valid.

Implications of Non/Late filing of TDS Statements:

* For Buyer of Property: In case of default on account of non/late filing of Form 26QB, a fee shall be levied u/s 234E of the Act. He shall be liable to pay, by way of fee, a sum of Rs. 200 (two hundred) for every day during which such failure continues. The buyer would also be liable for defaults of Late Deduction, Late Payment and Interest thereon. Penalty under Section 271H may also be levied on him by the Assessing Officer.

* For Seller of Property: Non/ Late filing of Form 26QB results into the TDS Credit not being available to the seller for claiming the amount of tax already deducted from the payments made.

In case of any clarification/suggestion, you may write to us on (info@tdscpc.gov.in). Please click the links for any assistance on Filing 26QB, Downloading Form 16B or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to providing the best possible services to you.

CPC (TDS) TEAM

Notes:

* Please quote correct PAN for the deductee rows in the TDS Statements.

* Please refer to our FAQs (https://www.tdscpc.gov.in/en/top-faq.html) and e-tutorials (https://www.tdscpc.gov.in/en/user-manual.html) for detailed screen-driven assistance, before seeking further help.

4. Penalties Applicable on non-filing of Form 26QB

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 making TDS payment on the purchase of the immovable 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 has to make the payment of TDS. It is his or her responsibility to furnish the information regarding the immovable property transaction online on the TIN website. After successfully providing details of the transaction, the deductor can:

• Make the TDS 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 June 2013. Hence, for properties where the formalities were completed before this date, there is no requirement to file Form 26QB.

Do I have to file Form 26QB if the payment and registration of the property was done before May 2013?

A seller of the property can claim the TDS deducted on an immovable property at the time of filing their income tax return. In a case where a refund arises due to TDS on sale of a property, the refund can be claimed through an ITR filing.

The income tax law allows for payment of interest at 0.5% per month under section 244A to a taxpayer on the refund due on an ITR filed. In a case of an ITR filed within the due date, the interest is payable from 1 April of the assessment year till the date of refund is granted. In a case where the ITR is filed after the due date, interest is payable from the date of furnishing of ITR till the date when refund is granted.