Real Estate

How to File TDS on the Sale of Property

The 1% TDS provision on the selling of land was implemented in the 2013-14 budget to track underhanded property transactions. In force since June 2013, the Law stipulates that, in view of the selling of property above Rs. 50 lakhs in India, a tax of 1% on the overall amount for selling must be deducted before the payment is made to the seller. The purchaser must then deposit this 1% of the TDS to the Government. Both the buyer and the seller’s PAN must be asserted before filling out Form 26QB to ensure that buyers can not avoid taxes on the capital gains they make.


TDS is paid on the entire sale amount. This applies even if there is more than one buyer or seller. The Union budget 2019 suggested a concept of “immovable property consideration” to cover any payments in the form of club membership dues, car parking fees, power or water charges, repair fees, advance fees or all other charges of a similar nature. This shall refer to immovable property acquired on or after 1 September 2019. TDS on the immovable property to be charged using Form 26QB within 30 days from the end of the month in which the TDS is deducted.


Now, the question arises how to go about the payment procedure. The payment is made through Challan 26QB and both online and offline modes are available. There are 2 modes of payment on the form 26QB: e-tax payment immediately (through net banking facility) and e-tax payment at the next date (e-tax payment through visiting any bank branch office). If you can not pay online, an electronic receipt for Form 26QB with a specific acknowledgement number will be created for you, which is valid for 10 days. You can take this to any of the pre-approved banks. The bank will continue with online transfer.


And if you are a first-time user, register with TRACES as a taxpayer with your PAN card number and challan number recorded during payment. If you enrol, you will be able to receive the certified form and you will issue this form to the seller. It has all the information;  TDS certificate number, the name and PAN of the deductee, the date and duration of the purchase, the approval number, the date of the deposit and the TDS deposited.


After your payment has been displayed in Form 26AS, log in to TRACES. Go to the Download tab on the “Form-16B” tab and press “Form-16B” After verifying all the details thoroughly, proceed further. 


The Department of Income Tax receives the Annual Information Return (AIR) from the Registrar / Sub-registrar Office on a daily basis. From this paper, the department will ascertain if you have made a property transaction in excess of Rs.50 lakh. In case the payment has not been made, you can get a notice from the IT department.