Section 194-IA- 1 Percent TDS rate applicable on Sale of Real estate transactions with Form 26QB and Form 16B application
Basic key takeaways things Regarding Form 26QB: TDS relates to the sale of real estate/property according to the Finance Bill of 2013, where the cost of sale is equal to or greater than Rs 50,00,000. Section 194 IA of the Income Tax Act, 1961, provides that, as of 1 June 2013, the buyer can deduct tax at 1 % when making the property payment on the purchase of real estate immovable property. The seller will receive Form 16B for the deducted payment of TDS, while the buyer has to obtain Form 26QB as per the income tax Act 1961.
Provisions requirements as per section in Section 194-IA are giving below
A new provision of income tax i.e Form 26QB is a TDS Return-cum-challan form for the payment of TDS deductions made U/s 194-IA of IT Act, 1961. The section of this Act deals primarily with transactions concerning the sale of immovable property, and the relevant TDS along with Form 26QB must be submitted within 30 days which are counted from the end of the month in which TDS was deducted. For Example, if the financial transaction took place on March 14th then Form 26QB must be submitted Compulsory by April 30th of that year.
Tax Law Provide and laid down several primary regulations for selling and purchasing real estate property. In each and every that transaction covered by Section 194-IA, if such financial transaction value is greater than Rs. 50 lakhs, the buyer, also known as the deductor, is allowed to deduct TDS. The deductor (purchaser) under this section 194IA will be required to issue to the deductee (seller) Form 16B.
The person buying of the property must deduct TDS from the overall selling valuation at the rate of 1 percent. A significant point to remember is that the purchaser, not the other party, has to subtract the TDS.
TDS shall not be deducted where the sale value is less than Rs. 50,00,000. In this event, if payment is in installments, TDS would have to be deducted from each payment.
The tax applies to the entire sum of the sale-even if the buyer or seller is more than one.
With effect from the FY 2013-14 budget, the 1 % TDS Rate deduction regulation on property sales was introduced to inspect underhanded property deals. With effect from June 2013, the regulation stipulates that on the sale of property exceeding Rs. 50 lakhs in India, a 1 percent tax on the total sale consideration must be deducted before making the payment to the vendor.
All the specifications for Form 26QB are provided under Section 194-IA.
- Under Section 194-IA, at the time the transaction is done, the buyer must deduct TDS at a rate of 1 percent of the total selling price. TDS u / s 194-IA does not attract to Agricultural Land transactions. This taxation amendment does not apply to agricultural land sales transactions.
- TDS on the sale of immovable assets shall not attract to transactions priced at less than Rs. 50 lakhs. For transactions above this cap, the entire cost of the transaction is deductible for TDS. For example, if the property costs Rs. 52 lakhs then you will pay TDS on Rs. 52 lakhs rather than Rs 2 lakhs (Rs. 52 lakhs – Rs. 50 lakhs).
- The purchaser will deposit the 1 % TDS to the Income-tax department as per Govt’s specification. The permanent account number must be mandatory provide by both buyer and seller while filling out Form 26QB to confirm that sellers do not avoid taxes on the capital gains they generate.
- If the payment is made in installments then TDS is deducted on a proportionate basis on each individual installment.
- The buyer doesn’t need to obtain a Tax Deduction Account Number (TAN) to deduct and deposit TDS. However, PAN is mandatory for both the seller and the buyer in case TDS deduction occurs using Form 26QB.
- The purchaser must deposit TDS and apply the Form 26QB within 30 days of the end of the month TDS was deducted.
- If the payment involves multiple buyers and sellers, the deductor will be required to apply multiple Form 26QB.
- After completing the complete process of deducting and depositing TDS, the buyer is mandated to provide the seller a TDS certificate within fifteen days of the transaction in lieu of the tax deducted and deposited to the Government.
- The buyer is required to obtain Form 16B and furnish it to the seller.
- TDS duly deposited and the properly filled Form 26QB, It must be deposited within 30 days from the end of the month in which TDS was deducted.
- For the seller the PAN card is mandatory. If the PAN card is not available to the seller, otherwise 20 % TDS will apply.
- After payment of the TDS, the buyer must give the TDS certificate to the vendor. This can be accessed in about two weeks from the date of deposit of TDS.
- Obtaining a TAN number is not compulsory for the customer.
Points should be Buyer of Property identify:
Deduct tax @ 1 % from consideration for sale.
Collect the Seller’s Permanent Account Number (PAN), and inspect the same with the Original PAN Card.
Seller’s and buyer’s PAN should be mandatorily filled in the online form for furnishing sales transaction information.
Do not make any errors in quoting the PAN or other details in the online form, since there is no online error correction mechanism. You are required to contact the Income Tax Department for rectification.
Points should be Seller of Property identify:
Provide your PAN to the Department of Income Tax for the collection of TDS details to the Purchaser.
Check your Form 26AS Annual Tax Statement for the deduction of taxes deducted by the Buyer.
Information needed for Challan26QB:
The following details are needed when filling out the form 26QB) for Full Challan 26QB.
- Sale & buyer’s PAN,
- Copy of the Seller & Buyer PAN Card,
- Information of seller & buyer, and amount of final consideration
- Property descriptions in which transaction to complete.
- The amount payable/credited & details of the tax deposit.
Frequently Asked Questions (FAQ) about On selling of property and application of form 26QB and form16B:
Here we answered a few of the commonly asked questions about Form 26QB:
Q How to Download 26QB Form?
A. If you are wondering how to pay and access the form through Challan 26QB then here are the steps you need to follow:
- Go to the TIN NSDL website and click on the link “e-payment: Pay Tax Online” located under the homepage’s “Services” tab.
- On the next tab, click on Form 26QB (Online Form for Property Furnishing TDS) under the TDS on Property Sale menu:
- Fill out the appropriate details
Download process: Form 26QB
- When the payment has been made, the purchaser will have to wait a few days for the information to be reflected on the TRACES website. Registered users will be able to receive either Form 16B or Form 26QB, accepted in Form 26AS.
- If the payment has been recorded in Form 26AS, the payment made on the sale of the property against TDS is reflected in Part F of Form 26AS under ‘Details of Tax Deducted at Source on Sale of Immovable Property under section 194(IA). This will display information such as the TDS certificate number, name of the deductee, PAN of the deductee, total transaction amount, booking status, date of transaction, TDS deposited, acknowledgment number, deposit date, and booking date.
- Now click on the ‘Downloads’ tab to go to the TRACES website. Click on ‘requested files’ in the drop-down line. If an application is not submitted the user will be asked to submit a download request. Enter the nine-digit acknowledgment number reflected on Form 26AS Part F. After doing so, the user may display the application status. The application will be processed in a few hours, and the user can access Form 16B by entering the number of the submission. To receive Form 26QB a similar procedure must be followed.
Q What type of form 26QB and form16B are?
A. Form 26QB is a return cum challan which is used for payment of TDS to the government of India. Form 16B is a TDS certificate issued to deduct TDS by the buyer to the seller.
Q What is the depositing procedure of TDS?
A. following List of the process for filing TDS is as follows
- Calculate 1 Percent of TDS on the overall consideration for sales. The seller will be paying Rs.59,40,000 after TDS for a property being sold for Rs. 60 lakhs.
- Make the payment online on Form 26QB. It creates a challan. Notice that this has to be completed within 7 days from the end of the month TDS is deducted in.
- The payment is reflected within 7 days on Form 26AS of the seller under Part F heading.
- The buyer will then be allowed to provide the seller with a TDS certificate called Form 16B. This is available for free on the TRACES website.
- To do this, register with your PAN and challan number on the TRACES web site.
Payment By Challan 26QB (Online & Offline) : To make your payment through Challan 26QB, here’s what you need to do:
- Stage 1-Go to.tin.egov-nsdl.com / e-tax new / tds non tds.jsp services online.
- Stage 2–Click Form 26QB.
- Stage 3- If you are a corporate taxpayer pick 0020. Others could just press 0021.
To fill Form 26QB, select one of the options given:
- (0020) Corporation Tax (Companies)
- (0021) Income tax (other than corporations)
- Assessment Year and financial year
- TDS deductor address and
- Information on Property
- After that, pick the Payment Mode
- Payment of e-tax (via net banking facility) immediately
- Payment of e-tax by subsequent date (payment by bank branch at a later date)
Step 4 – Fill up the empty blanks and click on Proceed.
Stage 5– Filled up empty blanks and press to Continue.
If you prefer the net banking option then you will use your Internet banking credentials to log in to your account and make the payment. You can access the Form 26QB when payment is completed.
However, if you choose the “Pat Later” option then a unique Acknowledgement Number will produce with Form 26QB for you. To make the payment, you need to print it out and take the form to your bank branch. You need to make the TDS payment using Form 26QB within 10 days of producing this form.
The taxpayer can log in to the TRACES website after completing the TDS payment and verifying that the payment is reflected in Form 26AS, and download Form 26AS from the Downloads menu after providing the relevant information.
A confirmation screen appears. The two options are given to user-” Print Form 26QB “and” Send to Bank. It also shows a specific acknowledgment number. Keep a record for future use of that acknowledgment amount. To take a copy of the document click “Print Form 26QB.”
Mode of Payment
You may make the Taxation payment instantly, i.e. via net-bank or by visiting one of the bank branches on a subsequent date. If the payment is made online, a print of the Challan 280 marked on 800 may be taken. If the payment is made at a branch, an e-receipt for Form 26QB will be generated along with a unique acknowledgment number. This has to be submitted with the cash or cheque to each of the approved lenders. The institution must generate the Challan until the tax sum is paid to the bank.
For the payment here is the list of some Authorised bank
- HDFC Bank
- Central Bank of India
- Indian Overseas Bank
- Jammu & Kashmir Bank
- Axis Bank
- Bank of Baroda
- Corporation Bank
- Andhra Bank
- ICICI Bank
- Dena Bank
- IDBI Bank
- Indian Bank
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Syndicate Bank
- Oriental Bank of Commerce
- United Bank of India
- Vijaya Bank
- Punjab and Sind Bank
- Punjab National Bank
- State Bank of India
- Allahabad Bank
- UCO Bank
- Union Bank of India
Q How does this appear on the seller’s sales tax return?
A. Capital gains from property sales along with the TDS details found in Form 26AS would have to be recorded in the seller’s income tax return.
Q What is the Process for issuing form 16?
Ans Process for issuing form 16 are as under :
- After 5 days, proceed to the TRACES portal (www.tdscpc.gov.in) to download Form 16B.
- Steps to get Form 16B downloaded:
- Register & sign in as a taxpayer using your PAN on the TRACES portal (www.tdscpc.gov.in)
- Under the “Downloads” tab, pick “Form 16B (For Buyer).”
- Enter the property transaction information for which you must submit Form 16B. Enter the Seller’s Assessment Year, Acknowledgement Number, PAN and press “Continue”
- A screen appears for confirmation. To continue, click on “Submit Application.”
- A message of completion should appear on the submission of a download request. To check for the download request please note the request number.
- To download the requested files, click on “Requested Downloads.”
- Request check with the request number. Select the row of requests and click on the “download HTTP” button.
Q How can I deduct TDS if I don’t have TAN?
A. To deduct TDS, the buyer need not have a Tax Collection and Deduction Account Number (TAN). Additionally, both the buyer and the seller need to provide their PAN for the transaction like TDS deduction.
Q. I had forgotten to subtract TDS when I bought a house. Now, what will I do?
A. Non-deduction of TDS on the remaining TDS balance faces a penalty value of 1 percent. To set the account straight you need to act and pay the penalty as soon as possible. Be sure to forward the TDS to the government and file the return of TDS within the specified period, as well as avoid certain penalties.
Q Is deduct TDS is required for purchasing agricultural land?
A. No. As per Section 194-IA, If you are purchasing agricultural land, you do not need to deduct TDS for the transaction
Q. Is the Deduction of TDS is Compulsory if I am Purchasing Agricultural Land?
A. No, As per section 194-IA there is no need to deduct TDS if you are Purchasing Agricultural Land. Agricultural Land is an area within the jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000 or It is Area in any area within below given distance measured are as under:
|The 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|
Q. How to make payment of TDS by using Form 26QB?
A. By using Form 26 QB, you can avail of any of the options for remit TDS to the government Choose the E-tax payment option on the TIN NSDL webpage and payment online with net banking. Generate Form 26QB with a unique acknowledgment number, and use this form to visit your bank to pay. Form 26QB with acknowledgment number is 10 days validity.
Q. What penalties do Form 26QB enforce for non-compliance with the above TDS provision?
A. Penalties relating to Form 26QB of Section 194-IA
It is important to remember here that failure to deduct TDS, issue Form 16B or failure to file Form 26QB attracts attention and penalty. The penalties which apply are as follows:
|Non-deduction of TDS||The interest of 1% on the amount not deducted for TDS|
|Non-remittance of TDS to the government||The penalty of 1.5 percent of the sum deducted each month|
|Delay in filing of TDS returns||The penalty of 200 Rs per day for the default day|