Form 26QB - Everything You Need To Know

Several essential guidelines for the sale and acquisition of real estate have been outlined in The Income Tax Act of 1961. Section 194-IA applies to these transactions. Property buyers are obligated to deduct TDS from the consideration due to property sellers, sometimes referred to as the deductor.

This is necessary if the transaction value exceeds Rs. 50 lakhs and the deductor must provide the deductee with Form-16B. (seller). Under Section 194-IA, all such criteria for Form-26QB are specified. We have thus covered all you need to know about form 26QB in this article.

What is the 26QB form?

Any person or HUF purchasing real estate valued at least Rs. 50 lakhs must deduct TDS. According to section 194IA of the Income Tax Act, TDS is applicable. TDS reduces the selling consideration provided to the resident seller at a rate of 1%.

Payments paid for club membership fees, parking fees, energy, water facility fees, maintenance fees, advance fees, or other similar fees must be considered when transferring any immovable property. Property buyers are required to submit TDS Returns on Form 26QB. TAN is not required of the property seller or buyer.

Both the buyer's PAN and the seller's PAN must be provided. Form 26QB and TDS must be submitted together. Within 15 days after the deadline for submitting the challan-cum-statement in Form 26QB, the buyer must give a certificate of the same in Form 16B.

Essential Elements of Form 26QB

The Income Tax Act of 1961's Section 194IA governs the taxation of the sale of immovable property and lays forth several essential guidelines. If the property is worth more than 50 lakhs, the buyer must withhold TDS by giving the seller a Form 16B.

The following are the essential parts of Form 26QB:

• If the total selling price exceeds Rs. 50 lakhs, the buyer must pay TDS at a rate of 1% of the entire cost.

• If the immovable property is agricultural land, the TDS cannot be assessed.

• The TDS must be distributed proportionally on each instalment if the payment is made in instalments.

• While the buyer, in this case, does not need a TAN (Tax Deduction Account Number), it is required by the provision to submit the PAN numbers of both the buyer and seller while deducting TDS.

• Within 30 days after the end of the month in which the transaction occurred, Form 26QB must be submitted.

• Each buyer must submit a Form 26QB if there are several buyers.

• Within 15 days of the transaction, the buyer must provide the seller with the TDS certificate once it has been deposited.

• Form 16B must be obtained by the buyer and given to the seller.

When should Form 26QB be filed?

Within 30 days after the end of the month in which the tax deduction is made, the buyer must submit Form 26QB.

Take this illustration to help you understand: Vikas sold the property to Shaam. On December 15, 2020, a sales consideration of Rs. 54,00,000 was paid. Here Form must be submitted on or before January 30, 2021. If the form is raised beyond the due date, there are late costs of Rs. 200 per day.

What information must be included on Form 26QB?

The following details must be provided:

• The buyer and seller's PAN.
• Buyer and seller's complete addresses.
• Details about the buyer and seller's contacts.
• Property Information.
• Amount credited/paid.
• Tax Deposit information.

When and how much TDS on the property sale is required?

If the property's stamp duty value exceeds the selling price, TDS must be subtracted from that amount. For instance, under the new amendment, TDS of 1% would be computed and deducted on a total of 65 Lacs, i.e., 65,000/-, and Mr B will be paid 59.35 Lacs if he acquired the property from Mr S for a price of 60 Lacs although the stamp duty value of the such property is 65 Lacs.

How should tax deducted be submitted on form 26QB to the government?

Mr B must pay the Rs. 65,000 (Sixty Thousand) he has deducted as TDS to the government in Challan Form 26QB within seven days of the following month (TDS on Property).

Points to Keep in Mind: Purchase of the Property

• The buyer of the property tax must subtract the 1% flat rate from the transaction price.
• The buyer must get the seller’ it is validated.
• Both the buyer's and the seller's PAN cards must be included in the online form.

Points to Bear in Mind: Property Seller

• For the IT Department to get information on the TDS, you must provide your buyer with the PAN card.
• Make sure the buyer checks the taxes subtracted from Form 26AS.

What criteria does Section 194IA of the Income Tax Act require?

As to the rules of section 194IA, when a buyer acquires an immovable property worth more than Rs. 50 lakhs, a tax at source is required to be deducted before making payment to the seller. Buildings, portions of buildings, and land are all considered immovable property (other than agricultural land). The following are some characteristics of section 194IA:

• Before paying the sale, the buyer must subtract TDS. The whole selling consideration is subject to a 1% tax rate.
• If the selling consideration is less than Rs. 50 lakhs, no tax deduction is made.
• When paying in instalments, the tax must be subtracted from each payment.
• Club dues, parking fees, water and energy bills, maintenance fees, and other fees are all included when transferring immovable property. Tax must be subtracted at 1% from the total consideration.
• The individual deducting the tax is not subject to the need to have a Tax Deduction Account Number.
• The government must receive payment of the tax withheld at source within 30 days after the end of the month in which it was withheld.
• The buyer must provide the seller with the TDS certificate in form 16B after submitting the tax payment to the government. The TRACES website offers the same information.
• If the seller fails to provide the buyer with a PAN, tax is deducted at the source at a rate of 20%.

Let's use an example to understand further how section 194IA applies. Mr Ankit sold a home to Mr Amit for Rs. 70 lakhs. Amit must first subtract the tax of Rs. 70,000 (1% of 70 lakhs) from the transaction value.

Specifications Set Out in Section 194-IA

• The property buyer must deduct TDS at 1% from the total transaction amount. The buyer, not the other party, must withhold the TDS, which is a crucial aspect to keep in mind.
• If the selling price is less than Rs. 50,000, TDS is not required to be considered. TDS must be deducted from each payment if the payment is paid in instalments.
• Even if there are several buyers or sellers, tax is still due on the total selling amount.
• Within 30 days after the end of the month TDS was deducted, TDS must be submitted with the correctly filled out Form 26QB.
• The vendor requires a PAN card user. 20% TDS is imposed if the vendor cannot provide the PAN card.
• The buyer must provide the seller with the TDS certificate after paying the TDS. Approximately two weeks after the TDS is deposited, this may be retrieved.
• The buyer is not required to get a TAN number.

Payment using a 26QB Challan (Online and Offline)

What you must do to pay with Challan 26QB is as follows:

• Step 1: Visit onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp as the first step.
• Step 2: Click on Form 26QB.
• Step 3: If you are a corporation taxpayer, choose 0020. On 0021, others may click.
• Step 4: Complete the blanks before clicking "Proceed."

A confirmation window will show up. The user will have two choices: "Print Form 26QB" and "Submit to the bank." Additionally, a specific acknowledgement number will be shown. For reference in the future, keep a note of this acknowledgement number. To print a copy of the form, click "Print Form 26QB."

Payment Mode You can make the payment right now through online banking or at a later time by stopping by any bank branch. The Challan 280 indicated on 800 may be printed off if the payment is made online.

If one chooses to pay at a bank, a Form 26QB e-receipt with a unique acknowledgement number will be generated. This must be sent with cash or a check to any approved lender. The institution will create the challan after the bank pays the tax amount.

Essential characteristics of Form 26QB under Section 194-IA

A few essential guidelines for the sale and acquisition of immovable property are set out in the Income Tax Act of 1961. The buyer, also referred to as the deductor, is obligated to deduct TDS in such transactions covered by Section 194-IA if the transaction value exceeds Rs. 50 lakhs. The deductor will then have to provide the deductee with Form 16B. (seller).

Section 194-IA is a complete list of the criteria for Form 26QB. As follows:

• By Section 194-IA, the buyer must deduct TDS at the time of consummating the transaction at a rate of 1% of the full selling value.

• Transactions involving agricultural land are not subject to TDS under Section 194-IA.

• For sales of real estate valued at less than Rs. 50 lakhs, TDS is not applied. Beyond this threshold, TDS is used to the total transaction value. If the property costs Rs. 52 lakhs, you must pay TDS on Rs. 52 lakhs rather than Rs. 2 lakhs (Rs. 52 lakhs – Rs. 50 lakhs).

• TDS is proportionally deducted from each instalment if the payment is paid.

• To deduct and pay TDS, the buyer does not need a Tax Deduction Account Number (TAN). However, if a TDS deduction is made using Form 26QB, both the buyer and the seller must have a PAN.

• The buyer has 30 days from the end of the month in which TDS was deducted to deposit TDS and file form 26QB.

• If numerous purchasers and sellers exist, the deductor must file multiple Form 26QB.

• The buyer must provide a TDS certificate to the seller within 15 days of the transaction in place of the tax deducted and deposited with the government after deduction and deposit.

• Then, the buyer must acquire Form 16B and provide it to the seller.

How Do I Fill Out the Online Form 26QB?

The processes to pay the tax via challan 26QB are as follows:

1. Access the NSDL website. Click on e-payment: Pay Taxes Online under the "services" tab.

2. The taxpayer may choose TDS on property in step two (Form 26QB)

3. The moment the taxpayer clicks "continue."

• If the taxpayer is a corporation payer, 0020 should be selected in the tax-relevant area, and 0021 should be chosen for a non-business payer. • Other details, including residence status, the buyer's and seller's PANs, the property's full address, the amount of taxes due, etc.

4. After providing all necessary information, two payment options are available: instant e-tax payment (using a net banking facility) and e-tax payment on a later date (e-payment of taxes by visiting any of the Bank branches). The taxpayer may choose one of the payment options and continue.

• The taxpayer may sign in to their net banking account and make an online payment if they choose the net banking option. The bank permits the taxpayer to print the Challan 280 after receiving the money.
• In the event of offline payment, an online acknowledgement with a specific receipt number is created. With the aid of this challan, the taxpayer may make a payment at any approved bank.

What are the Procedures for Downloading and Registering Form 26qb?

Here are the steps to take if you're wondering how to pay with Challan 26QB and download the form:

• Visit the TIN NSDL website and choose the "e-payment: Pay Tax Online" option on the main page's "Services" menu.
• Click on Form 26QB (Online form for submitting TDS on the property) on the following page's TDS on Sale of Property menu:
• Include all pertinent information.

To complete Form 26QB, choose one of the following options:

• Corporation Tax (Companies) (0020)
• (0021) Income tax (other than companies)
• Address of TDS deductor
• Financial Year and Assessment Year
• Property Information
• Then, decide on your method of payment.

1. Select the e-tax payment option as soon as you're done (through a net banking facility)
2. e-tax payment at a later time (amount at a later date through a bank branch)

• If you choose the net banking option, you will need to use your internet banking login information to access your account and make the payment. Having made your payment, you may now download Form 26QB.
• However, if you choose the "Pat Later" option, Form 26QB with a particular Acknowledgment Number will be created for you. To make the payment, print it out and take it to your local bank branch. Form 26QB must be generated within ten days of the TDS payment being made using it.

The taxpayer may go to the TRACES website and download Form 26AS after supplying the necessary information, making the TDS payment, and verifying that the payment is reflected in Form 26AS.

What Consequences Would a Late or Missing TDS Statement Have?

The buyer and the seller will be affected if the TDS statement is not filed on time or late. Following is a summary of the effects on both the buyer and the seller:

• A charge under section 234E will be assessed to the taxpayer if Form 26QB is not filed on time or is filed late.
• If the failure persists, a cost of Rs. 200 will be charged daily until it stops.
• Additionally, a fine under section 271H may be levied.
• The buyer will be responsible for paying interest on any late tax deductions and deposits.
• If tax is not deducted, interest will be charged at a rate of 1% per month between the date tax is supposed to be removed and the date it is deducted.
• If tax is not deposited, interest will be charged at a rate of 1.5% per month from the day the tax is deducted until the actual payment date.
• If the buyer failed to file timely or at all, the seller would not be eligible to claim the tax credit.

List of Approved Banks

The following is a list of authorised banks where online tax payments may be made:

• United Bank of India
• Union Bank of India
• Bank of Baroda
• UCO Bank
• Canara Bank
• State Bank of India
• Punjab National Bank
• Punjab and Sind Bank
• Jammu and Kashmir Bank
• Indian Overseas Bank
• Indian Bank
• IDBI Bank
• ICICI Bank
• HDFC Bank
• Corporation Bank
• Central Bank of India
• Bank of Maharashtra
• Bank of India

When selling a property covered by Section 194IA, what portion of the sale price is subject to TDS?

The total value, including stamp duty, must have TDS deducted by Section 194IA, not the amount exclusive of relevant taxes. The property is sold for Rs. 60,000, and Rs. 6,000 is subject to GST. TDS under Section 194IA will be deducted in this instance on Rs. 60,00,000 rather than Rs. 66,00,000.

The TDS regulation was implemented to maintain track of transactions involving the sale and purchase of the real estate. This was carried out because the market is highly speculative, and transactions are primarily made in cash and via banking channels. Additionally, this modification will make it easier for the government to identify situations where a property is bought for less than its stamp value.

Conclusion

Everyone who earns money subject to the tax must pay taxes to the government. Additionally, the assessee must submit a tax return for income. The income tax legislation specifies the tax deduction at source to simplify taxes and prevent tax evasion at numerous points. The tax withheld at birth may be subtracted from the overall amount of tax due, leaving the taxpayer responsible for the remaining amount.