September 2, 2016

How to pay TDS on sale of property online?

If you are buying a property whose value is more than Rs.50 lakh, then the buyer has to deduct TDS on the property and can pay TDS on sale of property online. Let us see how you can pay it online.

According to Section 194IA, if you are buying an immovable property (other than agricultural land) and value is equal to more than Rs.50 lakh, then the buyer must deduct the TDS and pay it to Government. In this post, we concentrate on how we can pay TDS on sale of property online option.

Meaning of Agricultural land for Income Tax purpose?

As I said above, agricultural land will not be considered for deduction of TDS under Section 194IA. Hence, first, let us understand the meaning of agricultural land as per IT act.

Any area which is outside the jurisdiction of municipality or cantonment board having a population of 10,000 or more and also which does not fall within the distance (to be measured aerially) given below-

# If the population of municipality/cantonment board is more than 10,000 but less than 1 lakh-2 Kms from local limits of municipality/cantonment board.

# If the population of municipality/cantonment board is more than 1 lakh but less than 10 lakh-6 kilometers from the local limits of municipality/cantonment board.

# If the population of municipality/cantonment board is more than 10 lakh-8 kilometers from the local limits of municipality/cantonment board.

Features of IT Section 194IA

Before proceeding further, let us understand the conditions and features of Section 194IA.

  • Property for this purpose means any immovable property but other than agricultural land.
  • The buyer has to deduct TDS on the sale of property. Hence, it is the responsibility of buyer but not the seller to deduct the TDS.
  • TDS rate for this purpose is 1%. However, if the seller does not have PAN, then the TDS rate is 20%.
  • TDS will be applicable when the sale of the property is more or equal to Rs.50 lakh.
  • TAN is not required to deduct TDS in the case of Section 194IA.
  • Deducting TDS is the responsibility of the buyer. He has to deduct TDS at the time of payment or at the time of giving credit to the transferor, whichever is earlier.
  • Hence, if the buyer is paying the lump sum, then the whole TDS should be deducted at the time of payment. However, if you applied for the home loan, then some banks assist you to deduct TDS before releasing the amount or installment to the buyer. As the buyer is the responsible person to deduct TDS, it is advisable to inform the bank for deducting TDS.
  • If you are paying in installments, then TDS should be deducting during each such installments.
  • TDS on property sale is deducted on total consideration irrespective of the number of buyers or sellers and their respective contribution in the property. If the property value is more than Rs.50 lakhs than irrespective of  the number of buyer or sellers, TDS will be deducted by Buyers.
  • TDS should be on the entire amount but not on the only exceeding amount of Rs.50 lakh. For example, if the sale value is Rs.60 lakh, then the TDS is on whole Rs.60 lakh not on Rs.10 lakh only (Rs.60 lakh-Rs.50 lakh).
  • TDS has to be deposited along with Form 26QB within 7 days from the end of the month in which TDS was deducted.
  • After depositing TDS, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.
  • Hence, buyer need Form 26QB and seller need Form 16B.

What are the information required to pay TDS on sale of property online?

# Buyer- Name , PAN number and Complete Address of the buyer. Buyer is called Transferee. If there are multiple buyers then details of all such buyers.

Seller- Name , PAN number and Complete Address of the seller. Seller is called Transferor. If there are multiple sellers then details of all such sellers.

# Property– Address of the property.

Transaction details- Date of Agreement, Total Value of Consideration,Payment Type (In Lump Sum or installment) or payment mode.

What if the buyer is NRI?

What is the buyer is NRI and seller is residentSS? Indian? Whether the TDS need to be still deducted by NRI buyer? The answer is yes. Because in this case seller is resident Indian. TDS on property applies to resident Indian seller not to the buyer. Hence, the buyer has to deduct TDS.

What if the seller is NRI?

If the seller is an NRI, then Section 194IA will not be applicable. In such cases, Sec. 195 will come into the picture. Buyer has to deduct 20.66% TDS on the sale price of the property if the capital gain is long-term. In the case of short-term capital gain, TDS will be 33.99% irrespective of income tax slab of NRI. Buyer will deposit TDS with Income Tax Department. TDS is applicable even if the value of the property is less than Rs.50 lakhs.

How to pay TDS on sale of property online?

Here, I will explain you about how you can pay TDS on sale of property online. However, you can pay the TDS offline by visiting the authorized banks. The list of authorized banks is available at NSDL Website.

Below are the steps to pay TDS on sale of property online.

# Visit NSDL Home Page.

NSDL Homepage

# Then Click on the option “TDS on sale of property’ and under TDS on sale of property, Click on the option ‘Online form for furnishing TDS on property’.

pay TDS on sale of property online

# Select Form for Payment of TDS on sale of Property and click on the option “TDS on sale of property”.

Form 26QB

# Fill the details as shown below.

Form 26QB 2

# Next step is to provide complete details of buyer and seller. Also, provide the property details. The screen looks like below.

Form 26QB Personal details

# Next is to submit the total amount buyer paying to the seller and also the TDS amount deducted on that.

TDS On property details

# Next step is to chose the payment option, bank, date of the payment and click on proceed.

Form 26QB Payment

# Once you click on the tab of proceed, you will be redirected to the confirmation page where all details you entered already will be displayed once again. Verify the details for any correction. Then click on the tab of CONFIRM.

# On confirmation a 9 digit unique acknowledgement number will be generated. This you have to save for future usage.

# Next click on tab called “Submit to Bank”. On clicking on Submit to the Bank, deductor will have to login to the internet banking site with the user ID/ password provided by the bank for internet banking purpose. Then enter bank details at bank site. Once the payment is successful, then counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.

What is Form 26QB?

Form 26QB is a challan used if the sale consideration of the property exceeds or is equal to Rs 50 lakh, then TDS at 1% should be deducted by the buyer of the property at the time of making payment of sale consideration.

What is Form 16B?

Form 16B is the TDS certificate to be issued by the buyer to the seller as a proof of the taxes deducted on the sale of immovable property and deposited into the Government Account.

How to download Form 26QB (for the buyer) and Form 16B (for the seller)?

Once you do the payment procedure as above, then the next step is to take the proof of TDS for buyer and seller. For the buyer it is Form26QB and for the seller, it is Form 16B. You can download Form 16B after two days of paying the TDS.

You have to login to Traces site. In this Traces portal, go to the “Download” tab click on “Application for Request of Form 16B”. For the Form 26QB, click on Application for Request of Form 26QB. For finishing this process, fill the 9-digit acknowledgment number and the details in Part F of Form 26AS. This will generate an application request number and give you an application. After a few hours, the request will be processed. Click on the “Downloads” tab and select “Requested Downloads” from the drop-down menu.

What is the penalty if the buyer of property not deduct/deposit the TDS?

As I said above, it is the responsibility of the buyer to deduct TDS and deposit with IT Department. Hence, if there is a failure to do so, then there are two types of penalties.

1) If the buyer failed deduct TDS-Penalty of 1% per month (or part thereof) from the date on which tax was deductible to the tax is actually deducted.

Let us take an example for the same. Mr.X purchased a property worth Rs.60 lakh on 20th August, 2016. He failed to deduct TDS. Finally, deducted the TDS on 10th October, 2016. The TDS at 1% on this transaction is Rs.60,000. Here, the delay is for 3 months August (part of a month is considered as full one month), September and October (part of a month is considered as a full one month). Therefore, penalty @ 1% per month on Rs.60,000 for 3 months will be calculated as below.

Rs.60,000 x (3 x 1%)=Rs.1,800.

2) If the buyer failed to deposit TDS amount with Government-Penalty of 1.5% per month (or part of thereof) from the date on which tax was collectible to the date of actual deposit.

Let us take an example for the same. Mr.X purchased a property worth Rs.60 lakh on 20th August, 2016. He deducted the TDS. But failed to deposit the same in Government before 7th September, 2016. Finally, deposited the TDS on 10th October, 2016. The TDS at 1% on this transaction is Rs.60,000. Here, the delay is for 3 months August (part of a month is considered as full one month), September and October (part of a month is considered as a full one month). Therefore, penalty @ 1.5% per month on Rs.60,000 for 3 months will be calculated as below.

Rs.60,000 x (3 x 1.5%)=Rs.2,700.

Late Fee Penalty for Applicable

Along with above penalty of interests, the late fee of Rs.200 per day will be levied subject to the maximum of the amount of tax is to be levied for late filing of TDS .

Let us tax the same above example, if Rs.60,000 TDS was deducted TDS on 20th August, 2016. But failed to deposit the same in Government. Finally, deposited the TDS on 10th October, 2016. But the same is to be deposited on or before 7th September, 2016. Then the penalty is calculated as below.

The number of days from 20th August, 2016 to 10th October, 2016=51 days.

Late fee=51 x Rs.200=Rs.10,200 or Rs.60,000 (TDS amount) whichever is lower. Hence, the late penalty will be Rs.10,200.

Hope this much information is enough for understanding the process on how to pay TDS on sale of property online.

71 Comments

  1. While doing payment through sbi internet banking, it is asking for payment amount and lot many values are present. I need to payment for TDS on property, in which field, payment need to enter? Fields are tax, surcharge, penalty, educational cess and fee 26qb Etx.

    Reply
  2. Hi Basava,

    Thanks for all the useful informations shared here in advance.

    I am a NRI seller and buyer is Resident indian. I wish to sell my property in India for 95 Lakhs with a single/one-time bank transfer. The property can’t be registered as it is sharing a temple land disputes. However the transactions in those places are through power of attorney with notary.
    1) what is the amount that will be need to be considered by the buyer for TDS ( assuming 20.66% for NRIseller as per the info above) & ( no sale deed and just POA without registration).
    2) How to claim back the TDS amount from the IT dept…( suppose through my auditor, I am showing Cost Inflation Index and with remaining money I want to deposit in capital bond/buy new house, if the TDS amount ( in this case 19L is locked in IT dept) how can I unlock this money to purchase new property or deposit in capital bond.
    3)How long will IT dept take to return the TDS money?
    4) If I dont want to repatriate can i take this money in resident acoount or is it mandatory for NRO a/c?

    Reply
    • Lakshmi-In my view, Power of Attorney means just give some power but not ownership. Hence, it is not considered as sale and in my view no TDS also. However, I suggest you to consult a CA before proceeding further.

      Reply
      • Thanks for quick response. I just checked with auditor

        Auditor suggests (Power of attorney –sale with possession) and that can be considered for filing tax

        Since I have no intention of repatriation,auditor suggests to get the money in resident account and pay the tax according to the calculations.This is legal and acceptable it seems.

        Not sure on the second point-feel little doubtful.

        Reply
  3. Hi, I have bought a home from builder with consideration value of 1.2Cr jointly with my wife (50:50). The TDS for this will be 1,20,000/-. Now, if we both pay 60,000 each as TDS, we will be individually paying only 0.5% TDS of the consideration amount. My question is: while filling form 26QB, do i mention TDS as 1% or 0.5% (in the box: “Please enter TDS rate (in %)*”).

    Reply
    • Prabhu-You have to mention 1% because the ownership also be divided right?

      Reply
  4. I’m purchasing a flat cost Rs.5266000/= . there are 2 sellers . I’m paying 1629000/= for 1 seller and 3637000/= for another seller. I have planned to execute 2 form 26QB for each seller as below with seller 1 and seller 2 details.

    Seller 1:Total Amount paid for 1 seller * =1629000 ;Basic Tax [to be paid] = 16290
    Seller 2: Total Amount paid for 2 seller * =3637000;Basic Tax [to be paid] = 36370
    Is this correct ?? is my understanding correct.

    Reply
    • Vinod-Yes. However, if the property is SINGLE, then why two SELLERS? You can treat them as a single entity.

      Reply
      • Sorry , 2 sellers =Joint owners of the single property.

        Reply
        • Vinod-Then in that case you have to use two forms as you mentioned above.

          Reply
          • Thank you very much Sir for your quick help and confirmation.

            Reply
  5. Hi,

    I had paid an booking amount in month of august 2017 – 6 lac. The sale agreement was done on Nov 18 2017 where in agreement it was mention by builder that 6 lac is received and no date of received was mentioned. I had to pay 30% of sale agreement which is 60 lac. My remaining amount is being paid by bank before 19-Dec-2017 they will release it to builder.
    1) So am i supposed to pay two times over here — one for the amount paid by me (6 lac) and another when bank releases the said amount .
    2) Can i club both amounts and pay TDS after 19 Dec 2017 , if yes what date should i enter in Date of payment/credit (Date of payment to the transferror/seller) And also what will be the date of tax deduction ?
    3) Do i get penalty on the earlier paid 6 lac amount as agreement was done on Nov 18 2017, if i pay now?

    Regards,
    Mac

    Reply
    • Mac-You can deduct the TDS for both payments at once. However, I think you have to pay the penalty for the earlier Rs.6 lakh as it is your fault of not deducting the TDS.

      Reply
      • Thank you very much for response .

        One last query what date should i enter in Date of payment/credit (Date of payment to the transferror/seller) .
        Is it should be the date of last installment ?

        Reply
  6. Hello Basavaraj,
    I had booked a flat above 50Lacs and 5Lacs was given as booking amount. Recently on 3-October-2017, i paid 35Lacs at one go without deducting the TDS. My querries are per below
    1- Whether TDS penalty on booking amount of 5lacs is still applicable?
    2- What is the time limit to deposit the TDS?

    Reply
    • Dilip-1) Yes.
      2) TDS has to be deposited along with Form 26QB within 7 days from the end of the month in which TDS was deducted.

      Reply
  7. Hi,

    I wanted check no. of separate TDS forms 26QB to be paid in below case:
    There are 2 buyers (couple) & 2 sellers (couple) for this property. Do I need to divide total TDS payable amount (1% of agreement value) into 4 combinations (4 equal tax payments) with each buyer & seller’s combination?

    Reply
    • Anand-Divide based on the % of ownership (as per my knowledge).

      Reply
  8. Dear Basu,

    Is TDS considered on Sale Agreement amount or Sale Deed Amount?
    IN BAngalore, Builders generally mention more amount in Sale agreement and less in Sale deed.

    If Sale deed (original registration) amount is less than 50 lakh, do we need to pay TDS?

    PLease comment.

    THanks,
    Pradipta

    Reply
    • Pradipta-TDS should be on sale deed. As I already mentioned above, if the property sale (deed) is less than Rs.50 lakh, then there will not be any TDS. But avoid such bad practices where builders get benefit and you be in trapped in long run due to higher capital gain taxes when you sell the same.

      Reply
  9. The sale consideration (Rs. 70 Lac) is paid in 2 months as below:
    1. July: 4 installments of Rs. 20 Lac, Rs. 15 Lac, Rs. 4 Lac & Rs. 21 Lac (on different dates),
    2. August: Last installment of Rs. 10,00,000.

    Question:
    For the month of July, will a single 26QB be sufficient? Or will I need to file 4 separate 26QBs?

    Reply
  10. Hello Sir,

    I purchase flat cost around 5066600.
    My own contribution is 19lack
    Remaining is home loan
    At the time of booking I pay to builder 100000 Only.
    Then we make agreement on 21 July 2017.
    So when I pay TDS? And also one question can I pay whole TDS in one time even i make payment in installment

    Reply
    • Gaurav-During each installment payment, you deduct the TDS and pay to IT.

      Reply
  11. Dear , Basavaraj
    i am very much thankfull to you for your kind suggestion .a new confusion appears in my mind . my seller is demanding money as schedule . he is demanding Rs 209000(unit price 200000+ service charge @4.5% Rs 9000). if i cut 1% TDS then unit price will be Rs 198000 . now my question is ,will i pay him (Rs 198000+Rs 9000) or (Rs 198000+Rs 8910 )?
    i want to say TDS deduction will reflect on service charge or not?

    please suggest me .

    Reply
    • Sujay-TDS will not be applicable to service charges. Hence, you must deduct on the unit price.

      Reply
      • thanks a lot.

        Reply
  12. hi Basavaraj ,
    i book ed a flat in kolkata on 2015 , i have make a payment of 70 % in 7 installment and i did not know about TDS , but after knowing i have deducted 1% of total payment from my last payment as TDS . i gave the seller all 16B for all installment payment. but now seller is saying he will consider only 3 TDS rest 4 will not consider because they were paid in past financial year. he is demanding the money which i deducted as previous TDS . is his demand is legal?if his demand is not legal then what can i do now?

    Reply
    • Sujay-You did rightly. He just want to avoid the TDS. You inform him that, if he is right then let both approach the IT regional office and confirm the same.

      Reply
      • thanks for your quick respond

        Reply
  13. Dear Basavaraj,

    I had given expression of interest for a property and had paid some amount as advance.
    But I had not executed any sale agreement yet. Do I need to pay TDS on the advance amount. What if I withdraw my EoI? How will I get back my TDS?

    Reply
    • Mohamed-I don’t think you have to deduct TDS. However, at the time of sale execution or part payment (during construction period), you deduct the TDS.

      Reply
  14. I have booked a flat in Bangalore by paying one lakh advance during pre launch offer in june’16.Due to delay in getting approval from bbmp lunching was delayed. Now they are asking to execute agreement.The delivery possession now extended by 1 1/2years which des not suits me.I want to cancel my booking &get back full amount I have paid(without any deduction)but they are refunding 80%only. Pl.advice how to get the amount.

    Reply
  15. Hi Basunivesh,

    Am planning to buy a Independent house and price of it is more than 50L , So do I need to deduct TDS and pay the remaining amount to seller?

    Reply
  16. Hi Basawaraj, how are you?

    I was planning to dispose off a property I hav had for 8.5 years. I got an offer for exchange of property. The property that I will get in exchange is of lesser value than mine and so the remaining value/amount is to be paid to me via bank transfer. What are the capital gains tax implications for me in general? In particular, I have to consider only the sum paid to me bank transfer for capital gains purposes right? The plan is to go for a Sale Deed and not an Exchange Deed, any advise on this?

    Thanks in advance : )
    Shaanth

    Reply
    • Shaanth-I am fine and hope the same with you too. If the property is exchanged based on sale deed, then each such sale deed is treated as regular sale. For taxation is not considered as exchange. Based on this your taxation will be fixed.

      Reply
      • Hi Basawaraj, thanks for the response : )

        Reply
  17. Hi, Basuvaraj

    i am facing the same problem like Raghabendra . total price is 50.4 lakhs and service charge is extra . builder is taking in installments as work progress .i have already paid 60% in which 30% is from my side and rest from bank loan .unknowingly i did not pay any TDS .now i want to pay TDS for 60% and for rest of portion regularly . i have some question can you suggest me kindly
    1. Is TDS applicable on service charges ?
    2.can i pay the TDS of 60% (which i forgot to pay) at time on a single date?
    3. should i have to pay any penalty for that , if so then from which installment it will start?
    4. How can i avoid penalty?
    if you kindly suggest me then i will very thankful to you .

    regards
    sujay

    Reply
    • Sujay-1) NO.
      2) YES.
      3) Yes, it starts from first installment.
      4) No way..

      Reply
      • Thank you for your suggestion .
        i have deducted total TDS up to 7th installment at this month. but today i have more query .if you kindly answer i will very thank full to you
        1. as i given the payment in installment .should i have to pay the previous unpaid TDS in separately ? or i pay at a time ?
        2.where to pay the penalty amount in form 26QB? or how to pay the penalty ?
        3. as my 1st installment was in 12th july 2015 .and paying the TDS in December 2016 then ,will month count start from july 2015 to dec 2016 = 18 month or august 2015 to dec 2016 =17 month ?
        please check the formula for penalty which i mentioned

        penalty =(1st installment amount x 1%) x number of month x 1%

        please answer

        regards

        Reply
        • Sujay-1) You can pay at one go.
          2) You have to pay this to IT Dept.
          3) From July to December.

          Reply
          • thank you for your quick response .
            how i pay the penalty to IT dept ?
            is there any provision to pay penalty at 26QB form ?

            Reply
  18. Thanks sir for very informative and Illustrative presentation on TDS on property

    Reply
  19. Thank you, Mr. Basavaraj. You have given a wonderful tip. I was unaware about this. Always spend a lot of time in queues.

    Reply
  20. Dear Basavaraj,

    I have booked a flat of 60 lakhs in Feb 2015 and payments is linked to construction wise. It is staggered over 8 stages of installment payment and i am supposed to get handover Mar 2017. Out of 60 Lakhs , i have opted for 20 lakhs loan and remaining paid through cash. I have not yet deducted the TDS for the payments i have made earlier because of lack of clarity of this. I have paid 7 installments now. Now i considering of paying of TDS of 1% but i am little confused how to proceed. How should i pay now in one shot on the total amount? What should i enter in date of payment and date of tax deduction? Please guide me

    Regards,
    Raghavendra P

    Reply
    • Raghavendra-You have to deduct 1% TDS on all your own payment as well as bank payments. Date of payment should as per you paid to them. Tax deduction you show as of today’s. But missing deducting is illegal.

      Reply
      • Since I have already paid the 7 installments long time ago and 1 installment to go , can i now deduct TDS of 1% on the whole 60 lakh and pay to the government?

        Reply
        • Raghavendra-Procedure is to deduct 1% as and when you pay. But unknowingly you not did. Hence, what I suggest is to do that past mistake corrections NOW.

          Reply
  21. Very useful God information. Thanks a lot. May God bless you Tonagatti.

    Reply
  22. Dear Basavaraj,

    Small query. In case of TDS on property paid in installments, by joint owners.
    Do the owners jointly pay TDS as one entity. If so, how?
    Or are they expected to pay TDS individually in equal proportion or otherwise?

    Reply
    • Ravi-In case of joint ownership, they can pay the TDS jointly. That option is available in online portal of IT Dept, where it asks for multiple buyers and sellers details.

      Reply
      • Thanks for the reply. Could you provide the link to the same please. The page I go to doesn’t give option for the same or I am missing it totally. Is it form 26QB? I can’t find multiple entry choice on that.

        Reply
        • Ravi-When you select Form 26QB from NSDL portal, then it redirect to the page where you have to fill PAN number of buyer and seller. Below that you will get information to add multiple buyers or sellers. Just check it. You will find that.

          Reply
          • Thanks a ton. Found it. However details of second person are not being asked.

            Reply
            • Ravi-It will not ask as a mandatory. If in your case it is applicable, then you can fill it.

              Reply
  23. If possible please explain the scenarios multiple buyers & multiple sellers. Multiple buyers is most likely as mostly it could be working couple buying stuff. I goofed up that scenario, and still waiting for correction to be effected by CPC of TDS.

    Reply
  24. Sir, This information is useful to all. I am reading all your articles. It is informative as well as useful to everyone.

    Reply
  25. My Sbi loan starts from 26th july . Approved amount 46 lakhs. On 31st july part period interest was 7000 rs. On 7 th first e.mi deducted. Again on 31 st August part period interest was 36000 rs. Now my outstanding amount is more than what they approved. How it’s possible. Kindly let me know. I have no moratorium period.

    Reply
    • Abhi-I am not sure of what went wrong. Check with your bank officials.

      Reply
      • Hi,
        thanks for the article, well written

        if buyer makes a part payment as advance by Aug 20 and pay the remaining amount by Sep 12 , can TDS at 1 percent be paid as single instance around Sep 10 or 11 without any penalty or should he pay the pay the TDS for the amount paid on Aug 20. pls clarify

        Reply

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