All about Form 26QB, Sec 194-IA & Form 16B

Section 194-IA  1 % 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

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.

Deductor (purchaser)  under this section 194IA will be required to issue to the deductee (seller) Form 16B.

The person buying 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.

These are:

• 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 the 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.
• 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 furnishes 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.

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