Form 26QB

This requirement falls under Section 194-IA of the Income Tax Act, 1961. The main purpose of Form 26QB is to ensure that the government receives its due tax on large property transactions. It helps the Income Tax Department track these transactions and ensures that the seller receives proper credit for the tax already deducted from their payment.

Key Aspects of Form 26QB

• Who needs to file? The buyer of the immovable property is responsible for deducting the TDS and filing Form 26QB. This applies to individuals and Hindu Undivided Families (HUFs).
• What is "immovable property"? This includes residential properties, commercial properties, and undeveloped land. However, it does not apply to agricultural land unless specific conditions regarding its location and population density are met.
• TDS Rate: The standard TDS rate for these transactions is 1% of the sale value. For example, if you buy a property for 70 lakh, you would deduct 70,000 as TDS.
• Threshold: TDS is only applicable if the property value is 50 lakh or more. If the property costs less than 50 lakh, you do not need to deduct TDS or file Form 26QB.
• PAN Requirement: Both the buyer's and sellers Permanent Account Numbers (PANs) are mandatory for filing Form 26QB. If the seller does not provide their PAN, the TDS rate can increase to 20%.
• No TAN Required: Unlike many other TDS deductions, the buyer does not need a Tax Collection and Deduction Account Number (TAN) to deduct TDS under Section 194-IA.
• Multiple Buyers/Sellers: If there are multiple buyers or sellers involved in a transaction, each unique buyer-seller combination requires a separate Form 26QB. For instance, if there are two buyers and one seller, two forms must be filed.
• Installment Payments: If the property payment is made in installments, TDS should be deducted proportionately on each installment.
• Due Date: Form 26QB must be filed, and the TDS paid, within 30 days from the end of the month in which the TDS was deducted. For example, if TDS was deducted on June 15th, the payment and filing must be completed by July 31st.

How to File Form 26QB Online

The process of filing Form 26QB is primarily done online through the official Tax Information Network (TIN) website of NSDL (now protean eGov Technologies Limited) or the Income Tax e-Filing portal.

Here's a step-by-step guide:

1.     Visit the Official Website: Go to the TIN-NSDL website (www.tin-nsdl.com) or the Income Tax e-Filing website (www.incometax.gov.in).

2.     Navigate to TDS on Property: On the TIN-NSDL site, select "Services" then "e-Payment: Pay Taxes Online," and then "TDS on Property (Form 26QB)". On the Income Tax e-Filing portal, look for "e-Pay Tax" and then "TDS on Property".

3.     Fill in Details: You will need to provide comprehensive information, including

·        Buyer's and seller's PAN details.

·         Communication details (address, contact information) of both buyer and seller.

·         Full address of the immovable property.

·         Total amount paid or credited for the property.

·         Tax deposit details.

·         Assessment Year (AY) and Financial Year (FY).

4.     Review and Confirm: Double-check all the entered details for accuracy. Errors in PAN numbers or transaction details can lead to complications. After confirming, an acknowledgement number will be generated, which you should save for future reference.

5.     Make Payment: You have two primary options for payment 

·         Immediate e-tax payment: Pay online through net banking or debit card.

·         E-tax payment on a subsequent date: Generate a challan with the unique acknowledgement number and make an offline payment at an authorized bank within 10 days.

6.     Download Challan: After successful online payment, a challan counterfoil with details like CIN (Challan Identification Number), payment details, and bank name will be displayed. You can print this as proof of payment.

7.     Issue Form 16B: After depositing the TDS using Form 26QB, the buyer is required to issue Form 16B (TDS certificate) to the seller. This certificate serves as proof that the TDS has been deducted and deposited on the seller's behalf. Form 16B can typically be downloaded from the TRACES portal (www.tdscpc.gov.in) about 5-15 days after filing Form 26QB.

Penalties for Non-Compliance

Failing to comply with the TDS regulations for property transactions can lead to significant penalties:

• Interest on Non-Deduction: If you fail to deduct TDS, an interest of 1% per month (or part of a month) is charged on the amount not deducted.
• Interest on Non-Remittance: If you deduct TDS but fail to deposit it with the government, an interest of 1.5% per month (or part of a month) is charged on the deducted amount until it is paid.
• Late Filing Penalty (Section 234E): A penalty of 200 per day is levied for delays in filing Form 26QB, up to the amount of TDS.
• General Penalty (Section 271H): The Assessing Officer can impose a penalty ranging from 10,000 to 1 lakh for failure to file the TDS statement on time or for providing incorrect information.

It's crucial for buyers to understand these obligations to ensure a smooth and legally compliant property transaction, avoiding unnecessary penalties and legal complications