Tax Deducted at Source (TDS) is an indirect tax collected by the government under the Income Tax Act, 1961. It is controlled by the Central Board of Direct Taxes (CBDT), which comes under the Indian Revenue Services (IRS). TDS is a method of ‘pay as and when you earn’ . When receiving or making, incomes and expenditures such as salaries, interest from banks, payment of rent, commision etc, the tax is withheld at the source itself.

So, how to file TDS on sale of property?

From June 1st, 2013 onwards, when a person buys an immovable property(building/part of a building/land except agricultural land) he/she has to deduct TDS while making the payment to the seller according to section 194 1A of the Income Tax Act.

Following are the essential requirements:

  1. The buyer has to deduct TDS at 1% of the total sale consideration. TDS has to be deducted by the buyer not the seller.
  2. No TDS deduction on sale consideration less than Rs.50 lakhs. If payment in installments, TDS has to be deducted on each installment.
  3. The seller has to provide their PAN card otherwise, a deduction of TDS at 20% is applicable.
  4. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
  5. The TDS is to be deposited along with the Form 26QB within 7 days from the end of the month in which TDS was deducted.
  6. The buyer has to present the TDS certificate to the seller after depositing the TDS to the government. It will be issued 10-15 days after the submission of TDS.
  7. For paying TDS, the seller requires the Form 16B and the buyer requires the Form 26QB.

Following are the steps to pay TDS and to fill Form 16B (for seller) and Form 26QB (for buyer):

For Form 26QB

  1. Log on to TIN NSDL website ( www.tin-nsdl.com ).
  2. Under ‘TDS on sale of property’, click on “Online form for furnishing TDS on property (Form 26QB)”.
  3. Select the applicable challan as “TDS on Sale of Property”
  4. Fill the complete form as applicable.

The following documents should be ready before filling up Form 26QB :

  • PAN of the seller & buyer
  • Communication details of seller & buyer
  • Property details
  • Amount paid/credited & tax deposit details

      5)  Submit the completed form. Click to confirm and the screen will show two options “Print Form 26QB” and “Submit to the bank”. A unique acknowledgement number will appear on the screen which should be saved for later use. Click to print the Form 26QB and then click on “Submit to the bank” to make the required payment online through internet banking.

      6)  On successful payment a challan receipt will be displayed containing CIN, payment details and bank name through which e-payment has been made. This receipt is proof of payment being made.

For Form 16B

  1. Register & login on TRACES portal ( www.tdscpc.gov.in) as taxpayer using your PAN.
  2. Under the ‘Downloads’ menu, select “Form 16B”.
  3. Enter the details related to the property transaction for which Form 16B is being requested. Enter the Assessment Year, Acknowledgment Number, PAN of Seller and click on “Proceed”.
  4. A confirmation screen will appear. Click on “Submit Request” to proceed.
  5. A success message on submission of download request will appear. Please note the request number to search for the download request.
  6. Click on “Requested Downloads” to download the requested files.
  7. Search for the request with request number. Select the request row and click on “HTTP download” button.