Everyone with taxable income is required to file an income tax return to declare their earnings and liabilities. In India, however, income tax regulations allow for the collection/deduction of tax at the source (TDS/TCS). On the one hand, this provides a steady flow of money to the government, while on the other, it keeps a close eye on tax evasion.
It is the payer’s responsibility to deduct tax (TDS/TCS) and pay it to the government’s credit. Obtaining a Tax Deduction Account Number (TAN) is required for such a tax deduction. Deductors must additionally file a Tax Deduction at Source (TDS) return for each quarter of the financial year, detailing the deductees, nature of the payment, tax deducted, the rate at which it is deducted, and so on. The TDS returns were filed to make it easier for the IRS to credit TDS to the correct deductees.
In addition to submitting returns, the deductor must supply the deductee with a TDS certificate for the tax deducted. Form 16B is one of the TDS certifications that the deductor is required to issue to the deductee under the Income-tax Act of 1961 in respect of TDS deposited with the government. The provisions relevant to Form 16B have been examined in this article under the following primary headings:
Nature of tax deduction and the person responsible to deduct tax
- The following are the provisions of this section:
- There is a transfer of immovable property (except in circumstances of compulsory acquisition).
- The term “immovable property” refers to land, buildings, and parts of buildings that are not agricultural land*.
- The buyer is responsible for paying the resident seller consideration for such a transfer.
- The transfer is for a sum of Rs 50 lakhs or more.
- At the time of credit or payment, the buyer must deduct tax at a rate of 1% of the consideration.
- If the vendor does not furnish a PAN, TDS will be deducted at a rate of 20% as per Section 206AA.
Form 26QB and Form 16B
For tax deducted under Section 194-IA, Form 26QB is a return cum challan for payment of TDS to the government that must be submitted electronically.
Within 30 days of the end of the month in which the deduction is made, Form 26QB must be submitted. For example, if payment/credit is made on April 16th, Form 26QB must be submitted by May 30th.
Because TDS is required for each installment, Form 26QB must be provided for each such deduction in the case of payment/credit in installments.
A transaction involving multiple parties
For each buyer and seller combination, a Form 26QB must be submitted.
Example 1: If there is only one buyer, B1, and two sellers, S1 and S2, Form 26QB must be filed separately for the B1 and S1 combination and the B1 and S2 combination, totaling two 26QBs.
Example 2: If a second buyer, B2, is added to the above example, Form 26QB must be filed separately for B1 and S1 combination, B1 and S2 combination, B2 and S1 combination, and B2 and S2 combination, totaling 4 26QB.
What if the payer does not possess TAN?
As previously stated, all deductors must obtain a TAN in order to deduct TDS and pay it to the government. All communications with the Income-tax (TDS) department must additionally include the TAN. TDS must be paid using the ITNS 281 challan number. Individuals may be parties to immovable property transfer transactions in most situations, and they are unable to use Challan No. ITNS 281 without a TAN, and getting a TAN for a one-time transaction is not practicable.
As a result, deductors covered by Section 194-IA have an exception and can file TDS returns without a TAN, and a separate Return cum Challan Form 26QB has been created to make it easier for deductors without a TAN to file TDS returns under Section 194-IA.
Form 26AS – It takes 7 days for the tax credit to reflect on the seller’s Form 26AS after TDS payment.
The due date for issuance of Form 16B
Within 15 days of the due date for submitting Form 26QB, the deductor must issue Form 16B to the payee, and Form 16B can be prepared and downloaded via TRACES – TDS Reconciliation and Analysis and Correction Enabling System. For example, if the due date for Form 26QB is June 14th, Form 16B will be issued on June 14th.
Procedure to generate and download Form16B from TRACES
- To register as a taxpayer on TRACES, enter your PAN and either the amount of tax deducted, the details of the challan, or the details of Form 26QB. Also, click ‘Proceed’ after entering the verification code. • If already registered, log in to TRACES with username ‘PAN’ and password ‘TRACES’.
- Select ‘Form 16B (For Buyer)’ from the downloads menu.
- Provide information such as the assessment year, the Form 26QB acknowledgment number, and the seller’s PAN. • Form 16B is now available in the requested downloads section under the Downloads category.
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