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According to the Finance Bill of 2013, TDS applies to the sale of immovable property, wherein the cost of sale is equal to or greater than Rs. 50,00,000. Sec 194 IA of the Income Tax Act, 1961, states that, beginning from June 1, 2013, tax at 1% shall be deducted by the buyer while making the payment for the property. For paying TDS, the seller has to obtain Form 16B, while the buyer has to obtain Form 26QB.
PAN card is mandatory for the seller. If the seller is not able to provide the PAN card, then 20% TDS is applicable.
After the TDS is paid, the buyer needs to provide the seller with the TDS certificate. This can be accessed in about two weeks from the date that TDS is deposited.
It is not mandatory for the buyer to obtain a TAN number.
To make the payment through Challan 26QB, here is what you need to do:
Step 1 - Go to onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
Step 2 - Click on Form 26QB.
Step 3 - Select 0020 if you are a corporate taxpayer. Others can click on 0021.
Step 4 - Fill up the empty blanks and click on Proceed.
A confirmation screen shall appear. The user will be presented with two options -"Print Form 26QB" and "Submit to the bank". A unique acknowledgement number will also be displayed. Keep a record of this acknowledgment number for future use. Press on "Print Form 26QB" for taking a copy of the form.
You can make the payment immediately i.e. through net-banking or on a subsequent date by visiting any of the bank branches. If the payment is made online, one can take a print out of the Challan 280 marked on 800. If one chooses to make the payment at a bank, an e-receipt for Form 26QB along with a unique acknowledgment number will be created. This needs to be submitted at any of the authorized lenders with the cash or cheque. Once the tax amount is paid to the bank, the institution will produce the challan.
The list of authorized banks where payment can be made include:
Indian Overseas Bank
Jammu & Kashmir Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Central Bank of India
Oriental Bank of Commerce
Punjab and Sind Bank
Punjab National Bank
State Bank of India
Union Bank of India
United Bank of India
Once the payment is complete, the buyer has to wait a couple of days for the details to be reflected on TRACES website. Registered users will be able to get Form 16B or Form 26QB, which have been approved in Form 26AS.
After the payment is shown in Form 26AS, the payment effected against TDS on sale of property is reflected in Part F of the Form 26AS under ‘Details of Tax Deducted at Source on Sale of Immovable Property under section 194(IA). This will show details like the TDS certificate number, deductee name, PAN of deductee, transaction date, TDS deposited, acknowledgement number, total transaction amount, status of booking, date of deposit and date of booking.
Now, go to the TRACES webpage and click on the ‘Downloads’ tab. In the dropdown menu, click on ‘requested downloads’. If an application has not been made, the user will be asked to make a request for download. Enter the nine-digit acknowledgment number reflected on Form 26AS Part F. When this is done, the user can view the status of the application. In a few hours, the application will get processed and the user will be able to view Form 16B by entering the request number. A similar process has to be followed to obtain Form 26QB.
Who has to pay TDS on sale of property?
The individual purchasing the property has to subtract TDS at the rate of 1% of the overall sale consideration. It is the buyer who needs to deduct the TDS - not the other party. TDS shall not be deducted if the sale amount is below Rs. 50,00,000. In case the payment is made in instalments, TDS will have to be reduced from every payment.