Form 16B is a certificate that proves TDS (Tax Deducted at Source) has been paid to the government when buying a property.
Simple Definition:
When you buy a property in India worth more than ₹50 lakhs, the law says you must deduct 1% TDS from the sale amount before paying the seller. You then deposit that 1% with the Income Tax Department.
Form 16B is the proof that this tax was deducted and deposited. It is issued by the buyer to the seller.
What is Form 16B Used For?
- To prove the buyer deducted and paid 1% TDS to the government.
- To help the seller claim credit for the TDS while filing income tax.
- It acts like a receipt of tax for the property transaction.
Example:
Let’s say:
- You buy a house in Delhi for ₹75 lakhs.
- You must deduct 1% TDS = ₹75,000 and deposit it to the government.
- After doing that, you generate Form 16B from the TRACES website.
- You give Form 16B to the seller as a tax certificate.
Key Features of Form 16B
- Issued by Buyer – Not the seller.
- Mandatory for Property Deals Above ₹50 Lakhs.
- TDS Rate is 1% of the property value.
- Form is Generated from TRACES Portal (after filing Form 26QB).
- Seller Can Use It While Filing ITR to show TDS credit.
Why It Matters
- It keeps your property deal legal and tax-compliant.
- It helps the seller avoid tax notices and claim TDS credit.
- Without Form 16B, the TDS might not reflect in the seller’s tax records.
Easy Way to Remember
Form 16B = Buyer’s TDS receipt for property sale. It proves tax was deducted and paid properly.
