TDS on the Sale of Property- Section 194IA

To file TDS (Tax Deducted at Source) on the sale of property under Section 194IA of the Income Tax Act, you need to follow these steps:

Obtain a TAN (Tax Deduction and Collection Account Number) if you don’t have one already. You can apply for a TAN online on the official website of the Income Tax Department.

Determine the applicability of TDS: TDS under Section 194IA is applicable when the consideration for the transfer of an immovable property (other than agricultural land) is Rs. 50 lakhs or more. If the consideration amount is below this threshold, TDS is not required to be deducted.

Calculate the TDS amount: The TDS rate for Section 194IA is 1% of the consideration value. Determine the consideration amount for the property transaction and calculate 1% of that value to arrive at the TDS amount.

Deduct TDS: If you are the buyer of the property, you are responsible for deducting the TDS. At the time of making the payment to the seller, deduct the TDS amount from the total payment and remit the balance to the seller. Ensure that you have the necessary funds available to make the TDS deduction.

Obtain the seller’s PAN (Permanent Account Number): It is important to collect the PAN of the seller to correctly report the TDS details.

File Form 26QB: Form 26QB is the statement-cum-challan for payment of TDS on the sale of property. You can fill this form online on the NSDL website or through any authorized banks. Provide the necessary details such as buyer’s and seller’s PAN, property details, transaction amount, and TDS amount.

Generate and issue the TDS certificate: After successfully filing Form 26QB, a unique acknowledgment number will be generated. Download the TDS certificate (Form 16B) from the TRACES website using this acknowledgment number. Issue the certificate to the seller within 15 days from the due date of filing Form 26QB.

Deposit TDS: Make the TDS payment online using internet banking or through authorized banks. The TDS amount should be deposited using challan ITNS 281.

File TDS return: Prepare and file the TDS return on the Income Tax Department’s online portal. You need to provide details of the TDS deducted and deposited in the return.

Retain documents: Keep copies of Form 26QB, TDS certificate (Form 16B), proof of TDS payment, and the filed TDS return for future reference and audit purposes.

Steps to pay TDS through challan 26QB and obtain Form 16B. Please follow these steps:

1. Visit the official website of the Income Tax e-filing portal for TDS payments:

2. Click on the e-file > e-pay tax from the drop down as shown below.

3. Read the instructions and guidelines provided on the page and click +New Payment.

4. Click on the proceed button on the tab ‘26QB- (TDS on sale of Property)’.

You also need to fill in the required details in the form, including:

1. PAN of the buyer and seller
2. Property details (address, city, state)
3. Transaction details (total sale consideration, TDS amount)
4. Payment details (bank name, branch, date of payment)

5. Verify the details entered and click on the “Proceed” button.

6. Add buyer’s details and click on continue.

7. Add seller’s details and click on continue.

8. Add property details and click on continue.

9. Add Payment details and once the payment get done it’s all set, and challan will be generated.

10. After successful payment, you will be provided with a Challan Identification Number (CIN) and a receipt.

Notice for non-filing form 26QB

The registrar/sub-registrar office consistently provides the income tax department with an Annual Information Return (AIR) detailing property transaction, including purchases and sales. By analysing this report, the department can determine whether you have engaged in a property transaction exceeding Rs. 50 lakhs.

If the buyer fails to deduct 1% tax at the source from the transaction amount or neglects to file the Tax Deducted at Source (TDS) within the designated timeframe, the IT department will issue a notice to the buyer.