TDS on sale of property

From June 1st 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than Rs 50lakhs, he has to deduct TDS when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.


Here are the requirements of this section:

• The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.
• No TDS is deducted if sale consideration is less than Rs 50lakhs. If installments are being paid TDS has to be deducted on each installment.
• Tax is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55lakh, you have to pay tax on Rs 55lakh and not on Rs 5lakh (i.e. Rs 55lakh – Rs 50lakh). This is applicable even when there is more than 1 buyer or seller.
• If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.
• If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
• This TDS has to be deposited along with Form 26QB within 30 days from the end of the month in which TDS was deducted.
• After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.
• The buyer is required to obtain Form 16B and issues this TDS certificate – Form-16B to seller.

Step 1: Payment of TDS on Sale of Property (Challan 26QB)

• Go to TIN NSDL website (click here)

• Now click on Proceed
• Fill the complete form as applicable 

• Submit the duly filled form to proceed. ​A confirmation screen appears. After confirming, a screen appears showing two buttons as "Print Form 26QB" and "Submit to the bank"
• You can pay e-tax payment immediately (through net banking facility) and e-tax payment on the subsequent date (e-payment of taxes by visiting any of the Bank branches)
• If you choose net-banking, you will be able to login to your bank and pay online. After you have paid, the bank lets you print Challan 280 with a tick on 800 (i.e. payment of TDS on sale of property). Print this out and keep it safe.
• If you cannot pay online, an online receipt for Form 26QB with a unique Acknowledgment Number is generated for you. This is valid for 10 days after generation. You can take this to one of the authorized banks along with your cheque. The bank will proceed with the online payment and generate your challan.

Step 2: Register in TRACES 

Now Proceed to TRACES portal (www.tdscpc.gov.in) after 5 days to download Form 16B. If you are a first-time user, register on TRACES as a Tax Payer with your PAN Card Number and the Challan number registered during payment.

• Go to TRACES portal, click on Login
• Now click on Register as a New user

• Fill all the details

Once you register, you will be able to obtain approved Form 16B (TDS certificate) and you can issue this Form to Seller. Check your Form 26AS seven days after payment. You will see that your payment is reflected in Part F under “Details of Tax Deducted at Source on Sale of Immoveable Property u/s 194(IA) [For Buyer of Property]”.Part F information is not available for Claim in ITR of the buyer.

This gives you details such as TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgment number (which is the same as the one on your Form 26QB), date of deposit and TDS deposited.

Step 3: Download Form 16B

After your payment, in Form 26AS has been reflected

• Login to TRACES
• Go to the Download tab and click on ”Form-16B (for the buyer)”.

• To finish this process, fill PAN of the seller and acknowledgment number details pertaining to the property transaction for which Form-16B is to be requested and click on “Proceed”.

• Verify all the details once and click on “Submit request”.
• After a few hours, your request will be processed. Click on the Downloads tab and select Requested Downloads from the drop-down menu.

• You should be able to see that the status of your Form 16B download request is Available. If the status says Submitted wait for a few hours more before repeating the last step. Download the .zip file. The password to open the .zip file is Date of Birth of Deductor (the format is DDMMYYYY). Your form will be available inside the .zip file as a pdf.