Form 26QB: TDS on Sale & Purchase of Property
When purchasing immovable property valued at more than Rs. 50 lakh, an individual is required by Section 194-IA of the Income Tax Act, 1961 to deduct TDS from the amount they pay the seller. Within 30 days of the month-end for which TDS was started, the TDS sum is paid to the government by submitting Form 26QB. For instance, the TDS amount needs to be paid to the government by July 31st, 2020, if a transaction was started on June 15th, 2020. It is vital to acknowledge that this TDS deduction and payment is contingent upon the acquisition of an immovable property after June 1st, 2013. It is not necessary to file a TDS if the property's formalities have been finished before the deadline.
Table of content
What is Form 26QB?
The online statement/challan form 26QB is used to pay this TDS to the government. When buying a property, the buyer must complete it and pay the TDS within the specified time. This form needs all the information about the property, as well as information on buyers, sellers, tax deposits, and other things. You can find it on the TIN-NSDL webpage. Any individual or HUF who buys a property for at least Rs. 50 lakhs have to withhold TDS. TDS is applicable under the Income Tax Act section 194IA. This property consists of all movable assets, such as:
Residential property
Commercial real estate
Plot or undeveloped
Every other property of that kind, excluding agricultural land
Only transactions involving selling revenues of at least Rs. 50,000,000 (fifty lakhs) are required to have TDS deducted.
Elements of Form 26QB
Certain essential papers and information may need to be disclosed or submitted as part of the Form 26QB filing procedure. Among these documents are:
The buyer and seller's address details
Their Permanent Account Number (PAN)
Specifics of the property
Buyer and seller's contact details
Credit or debit amount
Details of the tax deposit
Requirements for Form 26QB
A few guidelines for purchasing and selling immovable property, including land, buildings, and more, were established by Section 194-IA of the Income Tax Act of 1961. They are listed in the following order:
A buyer should deduct TDS at the rate of 1% from the sale value of the immovable property at the time of the transaction.
If the cost of the property is under Rs. 50 lakh, the buyer is exempt from deducting TDS.
In order to collect and pay TDS to the government, a buyer is not required to get a Tax Deduction Account Number (TAN). However, if TDS is withheld via Form 26QB, the buyer's and seller's PAN information is required.
If there are many buyers and sellers, more than one Form 26QB will be needed.
TDS is subtracted pro rata from the property payment if it is made in installments.
Within 15 days after the TDS deduction and payment, the buyer must provide the seller with a Form 16B, which is a TDS certificate. In the event that there are many buyers, TDS must be paid equally and at comparable rates by each buyer.
In cases where the immovable property is classified as agricultural land, the buyer is exempt from having to deduct TDS.
Notably, if these two circumstances are true, the contested land will not be regarded as agricultural:
The area where the land with more than 10,000 people is located is under the authority of a cantonment or municipality.
The land is located anywhere within the following radius:
Deposit of TDS under Form 26QB
Things to Bear in Mind: Property Buyer
The consideration for the sale must be reduced by tax at the flat rate of 1%.
To make sure it is validated, the buyer needs to have the seller's PAN.
The online form needs to have the PAN cards of the sellers and buyers.
Things to Keep in Mind: Property Seller
In order for the IT Department to receive information on the TDS, you must give your buyer the PAN card.
Make sure the buyer confirms the taxes that have been subtracted from Form 26AS.
Steps to Fill Out Form 26QB Online
Buyers need to follow these steps for online payment of TDS:
Step 1: Go to TIN NSDL's official website.
Step 2: Go to the TDS page for property sales and select "Online Form to File TDS."
Step 3: Select the challenge based on its suitability.
Step 4: Fill in all the necessary information. These are the documents that users ought to have on hand:
Property paperwork
Buyer and seller's PAN information
Their address and phone number
The total amount paid
Amount of tax placed
Step 5: After filling out the form completely, click submit. A confirmation box will show up; click confirm. On the screen, there is an acknowledgment number. It is advised that you store it for future use.
Step 6: To print the form 26QB online after confirmation, click the appropriate button.
Step 7: To make the payment using the net banking platform, which is accessible for a list of
approved banks, click the "Submit to the bank" option.
Step 8: A challan with the bank name, CIN, and other payment information is generated as soon as the payment is finished.
Payment Mode
You have the option to pay now via online banking or later by visiting any bank branch. If the payment is made online, the Challan 280 shown on 800 may be printed off. If a bank payment is made, an electronic Form 26QB receipt with a special acknowledgment number will be produced. This needs to be delivered to any qualified lender along with a cheque or cash. The bank will pay the tax amount, and the institution will then create the challan.
Authorised Banks for TDS Payment
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
HDFC Bank
ICICI Bank
IDBI Bank
Indian Bank
Indian Overseas Bank
Jammu and Kashmir Bank
Punjab and Sind Bank
Punjab National Bank
State Bank of India
United Bank of India
Union Bank of India
UCO Bank
Steps for Downloading and Registering Form 26QB
To download the form and make a payment using Challan 26QB, follow these steps:
Step 1: Go to the TIN NSDL website and select "e-payment: Pay Tax Online" from the "Services" menu on the front page.
Step 2: From the TDS on Sale of Property menu on the next page, select Form 26QB (Online form for submitting TDS on the property
Step 3: Remember to include any relevant details.
Step 4: You can store the unique acknowledgement number that shows up on the screen for further use.
Step 5: Select "Print Form 26QB" to print the form.
Step 6: To make the necessary online net banking payment, click "Submit to bank." Use the net banking feature to get to the bank's payment page.
Step 7: Following a successful payment transaction, a challan counterfoil including the payment details, CIN, and bank name will be shown on the screen. Additionally, you can view the same information on the official website of the Income Tax Department.
Form 26QB Due Date
Within 30 days of the end of the month in which the tax deduction is made, the buyer must provide Form 26QB. The buyer's due date computation is explained in the example below. As an illustration, A paid B Rs. 50,00,000 in total sales consideration for a property. The money was transferred on September 20, 2022. A is required by tax requirements to submit Form 26QB by October 30, 2022, at the latest. If the return is not filed by the deadline, late fines will be assessed at a rate of ₹200 per day, up to the total amount of TDS withheld.
Consequences of Late TDS Payment
Both the buyer and the seller may be impacted if the Form 26QB online payment is delayed. Among the serious repercussions that a late TDS payment could have are:
Section 234E imposes penalties on the taxpayer if the Form 26QB submission is not filed on time or is delayed.
The buyer will be penalised ₹200 till the Form 26QB is filed if the 26QB TDS payment is not filed on time.
In addition to the ₹200 penalty mentioned above, there will also be a fine assessed under section 271H.
The buyer bears the cost of interest on any postponed tax deductions and deposits.
Should the tax deductions remain unfulfilled, a 1% monthly interest charge will be applied. Interest will be assessed at the rate of 1.5% per month from the date of deduction until the actual payment is made if the tax is not deposited.
This interest amount is charged between the time the tax is scheduled to be removed and the time it is actually deducted.
The seller will not be able to claim the tax credit if the buyer does not file taxes or does not file at all.
Conclusion
Form 26QB is a vital document to provide when you engage in a real estate sale transaction valued at more than ₹50 lakhs. As we have seen, the buyer must provide Form 26QB and pay the TDS payment at 1% under Section 194-IA of the Income Tax Act. Form 26QB must be completed by the previously mentioned deadline computation. The buyer may be subject to harsh penalties and interest charges if this paperwork is not filed. With all the information on Form 26QB, the buyer can simply use the permitted banks listed in the article to submit the TDS payment. To avoid all fines, submit Form 26QB and make this payment on time.
FAQ
Q1. How do I submit a TDS payment using Form 26QB?
By submitting Form 26 QB, you can use any option to send TDS to the government. Make an online net banking payment by selecting the E-tax payment option on the TIN NSDL website. To make a payment, fill out Form 26QB and give it a special acknowledgement number. Then, take the form to your bank. The acknowledgement number on Form 26QB is valid for ten days.
Q2. How much and when will the TDS be applied to the property sale?
If the property's stamp duty value exceeds the sale price, TDS must be subtracted. For instance, suppose Mr. B paid Mr. S 60 Lacs for a piece of real estate, but the property's stamp duty value is 65 Lacs. Under the new amendment, Mr. B will receive 59.35 Lacs after a TDS of 1% is computed and deducted for a total of 65 Lacs, or 65,000/-.
Q3. What should I do if I do not have the seller(s)' PAN?
Form 26QB filing and TDS deduction are dependent on the seller(s) providing their PAN. It is necessary that you obtain the seller's PAN in advance.
Q4. What is the date of deduction in Form 26Q?
The date on which the buyer deducted TDS is referred to as the "date of deduction."
How can I pay TDS with Form 26QB?
When using Form 26QB to submit TDS to the government, you have two choices. They are as follows:
Use the e-tax payment option on the TIN NSDL website to make an online net banking payment.
Create a Form 26QB with a distinct acknowledgement number, bring it to your bank to make the payment. The acknowledgement number on form 26QB is valid for ten days.
Q5. How should Form 26QB be filed if there are joint buyers?
For each share, each buyer should ideally file Form 26QB or the e-statement form to receive a unique buyer-seller combination. For example, it is necessary to file four forms for equivalent property shares if there are two purchasers and two sellers. Likewise, two papers must be filed if there is one buyer and two vendors.
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