Form 26QB is a combined challan and statement used to pay Tax Deducted at Source (TDS) when purchasing an immovable property in India. As per Section 194-IA of the Income Tax Act, 1961, if you’re buying a property (excluding agricultural land) worth ₹50 lakh or more, you’re required to deduct 1% TDS from the sale consideration and deposit it with the government using Form 26QB.
Key Features of Form 26QB
- Applicability: Mandatory for property purchases of ₹50 lakh or above.
- TDS Rate: 1% of the total sale consideration or the stamp duty value, whichever is higher.
- No TAN Required: Buyers don’t need a Tax Deduction and Collection Account Number (TAN); PAN of both buyer and seller is sufficient.
- Due Date: TDS must be deposited within 30 days from the end of the month in which the deduction was made.
- Form 16B: After depositing TDS, the buyer must issue Form 16B (TDS certificate) to the seller within 15 days.
- Multiple Buyers/Sellers: Each buyer-seller combination requires a separate Form 26QB.
- Installment Payments: TDS should be deducted and deposited for each installment payment.
- Exemptions: TDS is not applicable on the purchase of agricultural land.
How to File Form 26QB
- Visit the Income Tax e-Filing Portal: Go to https://www.incometax.gov.in.
- Navigate to e-Pay Tax: Under the ‘e-File’ menu, select ‘e-Pay Tax’.
- Select Form 26QB: Click on ‘New Payment’ and choose ’26QB (TDS on Sale of Property)’.
- Fill in the Details: Provide information such as PAN of buyer and seller, property details, sale consideration, TDS amount, and payment details.
- Make the Payment: Choose the payment mode (Net Banking, Debit Card, etc.) and complete the transaction.
- Download Challan: After successful payment, download the challan as proof.
- Issue Form 16B: After 5 days, register on the TRACES portal (https://www.tdscpc.gov.in) to download Form 16B and provide it to the seller.
Penalties for Non-Compliance
- Late Deduction: Interest at 1% per month on the amount not deducted.
- Late Deposit: Interest at 1.5% per month on the amount deducted but not deposited.
- Late Filing: Penalty of ₹200 per day for each day of default, subject to a maximum of the TDS amount.
- Failure to File: Penalty ranging from ₹10,000 to ₹1,00,000 under Section 271H.
Example Scenario
Suppose you’re purchasing a property for ₹60 lakh. You must deduct 1% TDS, i.e., ₹60,000, and deposit it with the government using Form 26QB within 30 days from the end of the month in which the deduction was made. After depositing, issue Form 16B to the seller within 15 days.
Benefits of Compliance
- Legal Adherence: Ensures compliance with tax laws, avoiding penalties.
- Transparent Transactions: Provides a clear record of tax deductions for both buyer and seller.
- Ease of Future Transactions: Proper documentation facilitates smoother future property dealings.
