TDS On Sale Of Immovable Property, Filing Form 26QB

Form 26QB is a challan-cum-return statement for reporting the transactions liable to TDS on Sale of an Immovable Property u/s 194-IA.

Explains TDS on Immovable Property, applicability, threshold limits, rates of TDS, Time of Deduction, requirements to prepare TDS return and filing TDS under Section 194-IA

Form 26QB: TDS On Sale of a Property u/s 194-IA

This document covers

Background: TDS on Property Sale?
What is Section 194-IA?
What is Form 26QB & How to File Online?
What is Form 16B & Why you Care?
In Short

1. Background: TDS on Property Sale?

For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the point of generation of income. This system is called as “Tax Deducted at Source”, commonly known as TDS.

The Finance Act 2013-14 introduced TDS on Payment on transfer of certain immovable property other than agricultural land at the rate of 1% where the consideration for the transfer of an immovable property is Rs.50 Lakhs or above u/s 194-IA.

NOTE : Sale of Rural Agriculture land does not attract TDS u/s 194IA. Sale of Urban agriculture land attracts TDS u/s 194IA @ 1%

In respect of payments on sale of property:

The buyer of the property should furnish all details regarding the transaction of sale and TDS on Property in Form 26QB and this Form 26QB is required to be submitted at the time of payment.
After depositing the TDS, the buyer of the property would also be required to issue Form 16B to the Seller of the property in respect of the TDS deducted and deposited with the government.

IMPORTANT NOTE

TDS to be deducted and quarterly TDS return to be filed for every payment made to the seller. Not a consolidated TDS deduction and payment.

In case of a house loan disbursement through monthly installments, for every installment, one need to deduct and file appropriate TDS returns.

Changes in Budget 2024 : Earlier there was interpretation issue on whether to file TDS or not if the each buyer and seller proportionate value of property is less than 50 lakhs. Now the budget 2024 has clarified the same. The buyers are required to file TDS (Form 26QB) if the total value of the property exceeds Rs 50 lakh even though each share is less than Rs 50 lakhs. This is applicable from 01st October 2024

More on Form 26QB & Services

1. Sale of Property (Form 26QB) TDS Return Service & Pricing

2. What is Section 194-IA?

Applicability: Every person (Buyer) who are responsible for paying any sum to Resident Transferor (Seller) are required to deduct the TDS.
Threshold Limit: TDS is required to be deducted if the value of the immovable property is 50 lakhs or more than 50 lakhs
NOTE : If there are multiple buyers and sellers, the value of the property should be considered as aggregate of all the payments made by the buyers to Sellers for the purchase of property
Rates of TDS: The rate of TDS to be deducted is 1%.
Note: The rate of TDS on sale of immovable property made between 14/05/2020 to 31/03/2021 is 0.75% due to COVID19 Pandemic
Time of Deduction: The TDS needs to be deducted on the following times whichever is earlier.
1. Credit of amount to the account of resident Seller (or)
2. Payment of amount to resident Seller
Requirement of TAN: TAN is not required for deduction of TDS u/s 194-IA
Consideration for the transfer of immovable property: The consideration for transfer of immovable property includes all charges of the nature of club membership fee, car parking fee, water or electricity fee, maintenance fee, advance fee or any other charges of similar nature which are incidental to transfer of property along with property value. TDS needs to be deducted on the total consideration
TDS Return: The TDS deducted u/s 194-IA should be deposited to Government in Form 26QB (Challan cum Return)

3. What is Form 26QB & How to File Online?

Form 26QB is a challan cum return statement for reporting the transactions liable to TDS on purchase immovable property u/s 194-IA
Due Date: The Due date of filing Form 26QB is within 30 days from the end of month in which the tax deduction is made.
For example, Mr Ram has paid the amount in the month of April 2021 for purchase of immovable property, he needs file form 26QB by May 30.
Form 26QC can be filed using https://www.incometax.gov.in/iec/foportal/
Required Details for Filing Form 26QB: The following are the required details
1. PAN and Name of Buyer
2. PAN and Name of Seller
3. Address of Buyer and Seller
4. Mobile No and email id of Buyer and Seller
5. Address of property purchased
6. Total Value of property
7. Date of Payment and Date of tax Deduction
8. Type of Asset (Land/Building/Both)
9. Your Bank Payment Details to Pay
Form 26QB is organised in the following manner
1. Taxpayer Info
2. Address
3. Property Details
4. Payment Info

Important

It is advised to have all the above information handy before start filling the form as you have to complete within 30 mins from the start

4. What is Form 16B & Why you Care?

Form 16B is the TDS certificate to be issued by the deductor (Buyer of property) to the deductee (Seller of property) in respect of the tax deducted and deposited as TDS on property under section 194-IA.
Form 16B Consists of Name and Address of Buyer, Seller, Total Amount paid, TDS deducted, challan paid details, certificate number.
Form 16B should be given by the Buyer to seller within 15 days from the date of filing form 26QB

5. In Short

5.1 Points to be remembered by the Purchaser of the Property:

Deduct tax @ 1% from the sale consideration value.
Collect the Permanent Account Number (PAN) of the Seller.
All information regarding the sale transaction.
File the TDS return with Government.

5.2 Points to be remembered by the Seller of the Property:

Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.
Collect Form 16B from Buyer and compare the value of TDS actually deducted at the time of transaction against 26AS & 16B