Form 26QB: TDS on Sale of Property

What is Form 26QB?

Form 26QB is a mandatory online challan-cum-statement introduced by the Income Tax Department to facilitate the smooth deduction and deposition of TDS on real estate transactions. Under Section 194-IA, when an individual purchases immovable property (excluding agricultural land) valued at ₹50 lakh or more, they are required to deduct 1% TDS from the total sale consideration and remit it to the government.

This tax deduction ensures that the seller fulfills their capital gains tax obligation on the proceeds from the sale. It is the buyer’s responsibility to deduct and deposit the TDS on property sales above 50 lakhs, failing which penalties may be imposed.
 

Key Features of Form 26QB

• Applicable for transactions above ₹50 lakh: If the total sale consideration of the property is ₹50 lakh or more, TDS on the property purchase becomes mandatory.
• Mandatory PAN details of both buyer and seller: The PAN (Permanent Account Number) of both parties must be provided while filing Form 26QB. If the seller does not furnish their PAN, TDS will be deducted at a higher rate of 20% instead of 1%.
• Separate Form 26QB for each buyer-seller combination: If there are multiple buyers or sellers involved in the property transaction, a separate Form 26QB must be filed for each combination of buyer and seller.
• TDS payment through online banking or offline challan: The deducted TDS amount can be paid via net banking or debit card or by generating an e-challan for offline payment at an authorised bank.
• Form 26QB due date compliance: The deducted TDS must be deposited within 30 days from the end of the month in which the deduction is made. Late payment may attract a Form 26QB penalty for late payment.
• Generation of Form 26QB acknowledgement number: Upon successful submission, the buyer receives an acknowledgement number that can be used to check the Form 26QB challan status and ensure compliance.
• Issuance of Form 16B (TDS Certificate): Once the TDS is deposited, the buyer must issue Form 16B (TDS Certificate) to the seller as proof of tax deduction. This certificate can be downloaded from the TRACES website after 15 days of payment.

By understanding and complying with TDS on immovable property, buyers can avoid legal complications, penalties, and ensure a smooth property transaction process.
 

Step-by-Step Guide to Filing Form 26QB

Filing Form 26QB correctly is essential to avoid penalties and ensure compliance with TDS on property purchase regulations under Section 194-IA. Follow this detailed step-by-step guide to complete the process seamlessly.

Step 1: Visit the Official Portal
Go to the TIN Protean (formerly NSDL) website at https://www.protean-tinpan.com and navigate to the ‘e-Payment: Pay Taxes Online’ section under the ‘Services’ menu.

Step 2: Select TDS on Property Purchase
Choose ‘TDS on Sale of Property (Form 26QB)’, which will redirect you to the Form 26QB filing page. This section is specifically designed for reporting TDS on immovable property transactions exceeding ₹50 lakh.

Step 3: Enter Transaction Details

• Accurately fill in all required information, including,
• Buyer’s PAN and Seller’s PAN: Ensure that both PAN details are correct, as incorrect information can lead to Form 26QB correction requirements or rejection.
• Full address of the property: The exact location and address must be mentioned as per the sale deed.
• Sale consideration amount: Enter the total purchase value of the property.
• TDS amount: Calculate 1% of the total sale consideration as TDS on property sales above 50 lakhs.
• Payment method: Choose either net banking for online payment or e-challan for offline payment via an authorised bank.

Step 4: Verify and Submit the Form
Before submission, review all details carefully. After submitting the form, a unique Form 26QB acknowledgement number is generated, which can be used to track the Form 26QB challan status.

Step 5: Make Payment
You can proceed with Form 26QB online payment using net banking, a debit card, or UPI. If paying offline, download the challan form, visit an authorised bank, and complete the payment.

Step 6: Download TDS Certificate (Form 16B)
After successful payment, the buyer must issue Form 16B (TDS Certificate) to the seller as proof of tax deduction. This can be downloaded from the TRACES website approximately 15 days after payment. The seller needs this certificate for income tax filing and claiming credit for TDS on the property sale.
 

Understanding the Due Date for Filing Form 26QB

The timely deposit of TDS on property transactions is critical to avoid penalties. The Form 26QB due date is 30 days from the end of the month in which TDS was deducted.

For example,

• If a property was purchased on March 15, the TDS must be deposited by April 30.
• If the transaction was made in multiple installments, each payment requires a separate TDS deduction and Form 26QB filing.

Late payments result in interest charges and penalties, making it crucial to adhere to deadlines.
 

Penalties for Late Filing or Non-Payment of Form 26Q

Failure to comply with TDS on real estate transactions as per Section 194-IA can lead to severe financial penalties, including,

• Late deduction of TDS: If the buyer does not deduct TDS on time, an interest of 1% per month is charged from the due date until the deduction date.
• Late deposit of TDS: If the deducted TDS is not deposited within the due date, an interest of 1.5% per month is levied until the payment date.
• Late filing of Form 26QB: A penalty of ₹200 per day applies until the form is filed, though the total penalty cannot exceed the actual TDS amount.
• Failure to deposit TDS: The assessing officer can impose a penalty equal to the TDS amount not deposited, potentially leading to legal consequences.

To avoid these penalties, ensure timely deduction, payment, and filing of Form 26QB.
 

Special Scenarios in TDS on Property Transactions

1. Form 26QB for NRIs
When an NRI (Non-Resident Indian) sells property in India, TDS on property sale by NRI is deducted at a higher rate (typically 20% or more, depending on the nature of capital gains). The buyer must ensure,

• Obtaining a Lower Deduction Certificate (LDC) from the seller to deduct TDS at a lower rate.
• Depositing TDS at applicable NRI tax rates, which differ from resident transactions.
• Filing Form 26QB separately for TDS on property purchase by NRI.

2. Form 26QB for Multiple Buyers or Sellers
If multiple buyers or multiple sellers are involved in a transaction,

• Each buyer must deduct and deposit TDS separately based on their proportionate share in the property.
• A separate Form 26QB must be filed for each buyer-seller combination to maintain accurate tax records.

For example, if a property is jointly owned by two sellers and purchased by two buyers, a total of four Form 26QB filings must be made.

3. TDS on Installment Payments
If the property purchase is made in installments, the buyer must deduct TDS on each installment payment and file Form 26QB separately for each transaction. Non-compliance can lead to interest charges and penalties.

4. TDS on Property Under Construction
Even if the property is still under construction, TDS on property under construction applies if the total transaction value exceeds ₹50 lakh. Buyers must,

• Deduct 1% TDS on each payment made to the builder.
• File Form 26QB for every installment paid.
• Obtain Form 16B and provide it to the builder as proof of TDS deduction.

By understanding these special scenarios, buyers can ensure full compliance with TDS on real estate transactions and avoid any future tax complications.
 

Checking Form 26QB Status

After successfully filing Form 26QB, it is crucial to track its status to ensure that the TDS on the property purchase has been processed correctly. Buyers can check the Form 26QB challan status on the TIN Protean website using the acknowledgement number or PAN details. Here’s how to do it,

Step-by-Step Process to Check Form 26QB Status

1. Visit the TIN Protean website: Navigate to https://www.protean-tinpan.com and look for the ‘Challan Status Inquiry’ option.
2. Click on ‘Challan Status Inquiry’: This section allows users to track the status of their Form 26QB online payment and submission.
3. Enter the required details:
   • Acknowledgement Number (received after filing Form 26QB) OR
   • Buyer’s PAN and Seller’s PAN, along with transaction details.
4. Submit the details and check the current status of Form 26QB payment proof.
5. Download the confirmation for future reference.

If the status shows ‘Pending’ or ‘Failed, ’ buyers must recheck their TDS on immovable property payment details or contact their bank for resolution. Keeping track of this status ensures there are no delays in issuing Form 16B (TDS Certificate) to the seller.
 

Final Thoughts

Understanding and complying with Form 26QB is an essential responsibility for all property buyers in India. The TDS on property purchase requirement ensures that sellers meet their capital gains tax obligations while buyers remain compliant with tax laws and avoid unnecessary penalties. Section 194-IA mandates this deduction, making it a crucial step in high-value property transactions.

By following the correct Form 26QB filing process, buyers can ensure,

• Timely TDS deduction at 1% of the property value (or higher in case of NRIs).
• Accurate online payment and Form 26QB challan status tracking.
• Issuance of Form 16B to the seller as proof of tax deduction.
• Avoidance of penalties for late payment, incorrect filing, or non-deduction of TDS.

If you’re planning to buy a property worth ₹50 lakh or more, ensure you understand and comply with the TDS on real estate transactions. Staying informed about the Form 26QB due date, penalties, and payment process will help you navigate the complexities of property transactions smoothly.

By taking the right steps, you can enjoy a hassle-free property ownership experience while remaining fully tax-compliant!