#126 – On Form 26QB

learn about Form 26QB

Form 26QB is a vital tax document in India. It is used to report the Tax Deducted at Source (TDS) when there is a sale of property. It is applicable under Section 194-IA. This section mandates TDS must be deducted when a property worth more than ₹50 lakh is sold. The buyer of the property is responsible for deducting and submitting the TDS amount to the government.

The buyer must ensure that the payment of TDS is made at the time of the property transaction, and the form should be submitted online to the Income Tax Department. This TDS is then credited to the seller’s account. This can be used to offset their tax liability when filing their Income Tax Return (ITR).

Key Features of Form 26QB:
  • Applicable for Property Transactions: This Form is applicable for transactions involving the sale of property (immovable). It applies only to individuals or entities purchasing property worth more than ₹50 lakh.
  • TDS Rate: The TDS rate under Section 194-IA is 1% of the sale value of the property. If the buyer fails to deduct the TDS, they may face penalties, including interest on late payments.
  • Due Date: It must be within 30 days from the end of the month in which the payment for the property transaction was made. For example, if the payment was made on January 15, the TDS must be deposited by February 28.
  • Particulars Required: The buyer must fill in the details of the property transaction, such as the buyer’s and seller’s PAN, property details, sale amount, TDS amount, and payment date.
  • Challan and Certificate: After filing Form 26QB, the buyer will receive a TDS certificate in Form 16B. The seller uses this certificate to claim the TDS credit while filing their income tax returns.

Example:

Let’s say Mr. A buys a property from Mr. B for ₹70 lakh. According to Section 194-IA, Mr. A is should deduct 1% TDS on the sale value.

Sale Price: ₹70,00,000
TDS: ₹70,00,000 × 1% = ₹70,000

Mr. A will fill Form 26QB with details like the buyer’s and seller’s PAN, the sale amount, and the TDS amount. Once the form is submitted, Mr. A will deposit ₹70,000 with the government. Afterward, he will receive a TDS certificate (Form 16B) that Mr. B can use to claim the TDS credit.

Conclusion:

Form 26QB is essential for the buyer in property transactions exceeding ₹50 lakh. It also ensures that the correct amount of tax is paid on property sales. Buyers must be careful to deduct, deposit, and file the form within the prescribed time frame to avoid penalties. Form 26QB thus plays a key role in maintaining transparency and ensuring that TDS is properly accounted for in property transactions.

– Ketaki Dandekar (Team Arthology)

Read more about Form 26QB here – https://groww.in/p/tax/26qb

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