Form 26QB - TDS Payment on Purchase/Sale of Property

Introduction

When buying or selling a property, it is important to follow all tax rules properly. One such rule is the deduction of TDS (Tax Deducted at Source) on the sale of immovable property. To report this TDS payment to the government, Form 26QB is used. This form is filled out when the property buyer deducts TDS before paying the seller and deposits it to the income tax department. It helps in maintaining transparency in property transactions and ensures that tax is collected correctly. Understanding Form 26QB makes property buying easier and avoids penalties or legal issues later.

What is Form 26QB?

Form 26QB is a challan-cum-statement used to deposit TDS on the sale of immovable property such as land, house, building, or flat. This form is filed under Section 194-IA of the Income Tax Act. It is mandatory in cases where the property value is more than Rs. 50 lakh.

This form must be submitted by the buyer, not the seller. The buyer must deduct 1% TDS from the sale consideration and deposit it using Form 26QB. There is no need for a TAN number to file Form 26QB; the buyer can use their PAN along with the seller’s PAN.

When and How Much TDS Shall be Deducted on the Sale of the Property?

TDS must be deducted when:

• The sale value of the property is Rs. 50 lakh or more.
• The property is immovable (not agricultural land).

TDS Rate:

• 1% of the total sale consideration.

For example:

If a property is sold for ₹60,00,000, the buyer must deduct 1% TDS = ₹60,000 and pay the seller ₹59,40,000. The deducted amount must be deposited with the government through Form 26QB.

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Components of Form 26QB

Form 26QB requires:

• Buyer’s name, address, contact details, PAN
• Seller’s name, address, PAN
• Property address and details
• Sale price and payment schedule
• Amount of TDS deducted
• Mode of payment (Net banking/bank counter)

Requirements Associated with Form 26QB Under Section 194-IA

1. TDS must be deducted at the time of payment.
2. Buyer must deposit TDS using Form 26QB within 30 days from the month-end.
3. Sellers must provide the correct PAN to avoid a higher TDS of 20%.
4. Form 16B (TDS Certificate) must be issued by the buyer to the seller after payment.

Procedure To Pay TDS Through Form 26QB.

1. Visit the official website of the Income Tax Department's reporting body (TIN-NSDL website).
2. Go to the "TDS on Sale of Property" section or select the challan "Form 26QB."
3. Choose the correct option: "Tax Applicable" (e.g., 0021 for companies, 0020 for non-companies) and "Type of Payment."
4. Carefully enter the PAN details of both the Buyer and the Seller and provide the necessary address and contact information.
5. Fill in the required Property Details and the Total Sale Consideration (the full price).
6. Enter the TDS amount (1% of the sale price) and the dates of the transaction.
7. Select the payment method (Net Banking or e-Payment at Bank Branch) and submit the form.
8. If paying online, you will be redirected to your bank's website to complete the payment and get a Challan Identification Number (CIN).

How to Download Form 26QB?

Form 26QB itself is an online challan, but after paying the TDS, the buyer can download the final proof of payment, which is the acknowledgement receipt (Challan).

1. The buyer should save the e-receipt that is generated immediately after successful online payment, which contains the CIN and other details.
2. The formal downloaded document (the proof of tax credit) is available on the TRACES website.
3. The buyer must first register on the TRACES website as a "Taxpayer" using their PAN.
4. Log in to the TRACES account and go to the "Downloads" menu.
5. Select the option to request "Challan Status" or "Form 16B" (which contains the Challan details) by entering the Form 26QB details (like CIN or property details).
6. Once the request is processed (it takes about a week), the buyer can download the final proof of tax payment.

Where can the TDS deducted on the Property be seen by the Seller?

1. The most common place is the seller's Form 26AS. The 1% TDS paid by the buyer through Form 26QB will show up here, usually within a few weeks after the payment.
2. The newer and more detailed AIS also shows the details of high-value property transactions and the related tax deducted.

Penalty Charges Associated With Form 26QB

• Late filing fee: Rs. 200 per day
• Interest for late deduction: 1% per month
• Interest for late payment: 1.5% per month

Penalty may be charged if not filed at all.

Things to Remember by Seller of the Property

1. The seller must provide their correct PAN to the buyer without fail. If the seller does not provide a PAN, the buyer must deduct 20% tax instead of 1%
2. The seller should confirm with the buyer that the 1% TDS has been cut from the sale amount before receiving the final money.
3. The seller must check their Form 26AS online regularly to ensure the TDS paid by the buyer shows up against their PAN.
4. When the seller files their ITR, they can use this TDS amount showing in their Form 26AS as a tax credit to reduce their overall tax payable or claim a refund.
5. The seller should ask the buyer to provide them with the Form 16B. This is the certificate issued by the buyer that confirms the tax deduction and payment.

Things to Remember by Purchaser of the Property

1. The buyer must ensure they deduct 1% of the total sale price before giving the money to the seller, but only if the price is ₹50 Lakh or more.
2. The buyer must file Form 26QB and pay the TDS within 30 days from the end of the month in which the tax was deducted.
3. The buyer must save the online Challan/e-receipt that they get after paying the TDS.
4. After paying the TDS and getting the acknowledgment, the buyer must download Form 16B (the TDS certificate) from the TRACES website and provide it to the seller. This is a must-do duty for the buyer.
5. The buyer must ensure the PAN of the seller is entered correctly in Form 26QB, as an incorrect PAN will mean the credit goes to the wrong person, leading to issues and potential penalties.

Form 26QB Due Date

The buyer must pay the TDS and submit Form 26QB within 30 days from the end of the month in which the tax was deducted (the payment was made to the seller).

Example for FY 2025-26:

Date of Payment to Seller (Tax Deduction)

Month of Deduction

Due Date for Filing Form 26QB and Payment

May 15, 2025

May 2025

June 30, 2025

August 2, 2025

August 2025

September 30, 2025

Conclusion

Form 26QB ensures that tax on property transactions is collected smoothly and correctly. Filing this form on time prevents penalties and keeps property records clear. Both buyers and sellers should understand their responsibilities to ensure a trouble-free property transfer.