Monday, June 18, 2018

TDS Notices, Defaults, Penalties, Interest and Online Correction of 26QB – TDS on sale of Immoveable Property

TRACES is the site where we can generate 26QB – TDS on sale of Immoveable Property make corrections and generate TDS Certificates for TDS deducted by the buyer of property
TDS is applicable on transfer of Immovable property under section 194IA enacted by Finance Act 2013 where the consideration of property exceeds or is equal to 50 lacs. TDS Provisions for Property Sale/ Purchase above 50 Lacs are as under:
1)     WEF 1st June, 2013 Tax @ 1% should be deducted by the buyer of the property at the time of making payment of sale consideration.
2)     For furnishing of Information of such transaction a 26QB form is to be filed online containing PAN of seller as well as buyer & Address, Transaction value and date of agreement for such transaction. In case of more than 2 buyers or sellers the Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share.
3)     Any sum so deducted under section 194 IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made either through Net Banking or through Authorized Bank Branches.
4)     TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited in Government Account.
5)     Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share.
6)     If the person liable to deduct tax does not file 26QB and deposits the Tax Deducted in time will be treated as Assessee in default and shall be liable to pay Interest under section 201 of Income Tax Act,1961 before furnishing the Form 26QB
(a)   In case of TDS Deducted but Not paid in Time @1.5% for every month or part of a month on the amount of such TDS from the date on which such TDS was deducted to the date on which such TDS is actually paid.
(b)   In Case TDS is not deducted @1% for every month or part of a month on the amount of such tax from the date on which such TDS was deductible to the date on which such TDS is deducted.
7)     No filing or late filing of statement of TDS / TDS returns in Form 26QB the Assessee in Default shall be liable to pay late fees under section 234E @ Rs 200 per day till the failure to file TDS statement continues with challan within a period of seven days from the end of the month in which the deduction is made.
8)     The late filing fees shall be deposited before filing the TDS return in Form 26Q but the total fee cannot exceed the amount of TDS deductible for which statement was required to be filed filing fee.
9)     No filing or late filing of statement of TDS / TDS returns in Form 26QB shall invite penalty under section 271H minimum Rs 10,000/- to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement.
10) As Per section 271H, penalty will be levied if the deductor/collector files an incorrect TDS return minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000/-. In Case TDS return is filed without payment of Penalty under section 271H it may be levied on deductor by the assessing officer.
11) TRACES is sending two types of notices:
 i) Demand of interest payment in case TDS is paid but interest is payable, and
ii) Demand of TDS and interest payment in case TDS is deducted or not deducted but not paid to the credit of the Central Government and TDS return in Form 26QB not filed.

Online Correction of 26QB

The CPC TDS released Online Correction facility for TDS statements filed in form 26QB, for TDS on transfer of Immovable Property where consideration exceeds Rs. 50 Lacs. The TRACES has given now Online Correction facility for closure of the following TDS Defaults due to incorrect data entry in the 26QB statement.

Steps for online correction in 26QB
·         Register at Traces.
·         Register your DSC.
·         Make Correction in the following Fields : PAN of Buyer Details, PAN of Seller Details, Amount Paid/Credited, Date of Payment / Credit, Date of Tax Deduction, Financial Year & Details of Property.
·         No DSC required for Corrections in the fields of email address, Mobile Number and Address of the Property.
·         In case a person does not have DSC then Assessing Officers’ Approval is required except for amendment in E Mail ID, Mobile and Address of the property.

Some important points related to correction of form 26QB
1) Bank Branches cannot do 26QB challan correction.

2) Assessing officers are not authorized for 26QB challan correction.
3) Correction only in select challan fields:
·         Buyer PAN
·         Seller PAN
·         Assessment Year
·         Major Head i.e.0020- Income tax on companies(Corporation Tax) and 0021- Income Tax(other then companies).

4) Challan fields that cannot be corrected: Correction is not possible for following relevant fields:
·         Total Value of Consideration (Property Value)
·         Minor head i.e. Type of Payment – 800 (TDS on Sale of Property)
·         Address
·         Property Details
·         Payment Details
·         TDS or Tax Deposit Details including penalty i.e. interest and Fee.

5) The Process of 26QB Challan Correction: For 26QB Challan Correction, a buyer has to submit the written application to the PAN Assessing Officer as per the jurisdiction of the buyer’s PAN. To know your PAN Assessing Office, please click on the following link :

6) NOC from seller: A buyer need NOC from the seller on an affidavit in original. This original NOC should be attached to the application for 26QB Challan Correction.

7) Correction Status: If your correction is approved by IT department then it will be reflected in the Form 26AS of the seller. A buyer may request the seller to check his/her Form 26AS for corrections.

TDS on Sale of Property, Delays & defaults in 26QB and
payment of TDS

The Buyer of Immovable Property (Other than rural agricultural land) is required to deduct tax on the rates applicable from the sales consideration payable to RESIDENT Transferor provided the sales consideration is equal to or more than Rs.50 Lacs.
Section 194IA would be applicable if any of the following conditions are satisfied:
1. If the transaction of sale is occurred on or after 1st June 2013 & sales consideration is equal to or exceeding Rs. 50 Lacs. OR
2. If the advance consideration received before 1st June 2013 is equal to or exceeding Rs. 50 Lacs but sale agreement is made after 1st June 2013.

Tax is to be deducted at Source at the time of payment or at the time of giving credit to transferor, whichever is earlier. So at the time of sale of property the tax can be deducted in installments or lump sum as per the date of agreement by the 7th of the subsequent month in which agreement is entered into for payment in installments or in lump sum but as per the date of payment. If any advance payment is being made, then tax is to be deducted at the time of such payment. If the payment is made in installments then tax is to be deducted on payment of each installment.

The Tax is deductible @ 1% of the consideration payable to resident transferor [if valid PAN is quoted]. If the seller does not provide valid PAN, then the tax is deductible @ 20%.
The tax deducted is to be deposited by challan cum statement on Form 26QB. In case
the property is held by joint owners, the provisions of Sec 194IA will still be applicable
because the threshold limit of Rs. 50 Lacs is property-wise and not transferee-wise.
Permanent Account Number (PAN) of the seller as well as buyer should be mandatorily
furnished in the online Form for furnishing information regarding the sale transaction. If the PAN of seller is not filled or wrongly filled, then TDS would be deducted @20%.

Procedure of depositing the Tax Deducted:

The buyer has to fill the details of buyer and seller in Form No. 26QB. After that, the buyer has to remit the tax deducted electronically. On receipt of payment confirmation, a nine digit alpha numeric acknowledgement no. would be generated and such acknowledgement no. is to be kept by the buyer. On successful payment, a challan containing CIN and payment details would be generated. Print this as it will be required at the time of registration as Tax Payer.

There are two options to make payment:
a) Online payment through net Banking.
b) E-Payment at a subsequent date.
In case a) option is selected then as soon as click for first option there is window to select the name of the bank from where the payment is to be made and then account details and other details a for E-payment are required. After successful payment the receipt is generated which is further required at the time of generating Form 16B i.e TDS Certificate.
In case b) option is selected then Acknowledgement slip for TDS on sale of immovable
property is generated having PAN of Buyer, PAN of Seller, 9 digit alpha numeric Acknowledgement number, Amount of TDS as well as last date of payment. Then second step in this option is to make payment which can be done by bankers on behalf of the Buyer of the property or otherwise e-payment can be made by Clicking on the given link:
After clicking the above web page there are the following information is to be entered:
·         PAN of Buyer.
·         PAN of Seller.
·         Ack Number of Pre-generated 9 digit Alpha Numeric Acknowledgement Number.
·         Assessment Year which is subsequent to Fin. year in which property is purchased i.e Assessment Year is 16-17 for Financial Year 15-16.
Generally payment of TDS on Purchase of property is a huge amount so Income Tax
Department has given tutorials for the same.
There are E-Tutorials for TDS on Sale of Property:
E-Tutorial for making the on line payment or for subsequent payment please follow the given links respectively:
TDS on Property - e-tax payment immediately (through net banking)
TDS on Property - e-tax payment on subsequent date (through bank branches)
In case of failure to deposit the tax deducted, interest and penalty would be levied on the purchaser. Interest will be charged @ 1.5% per month or part of the month from the date of deduction to date of actual deposit. TDS CPC has raised the demands against delays and defaults in filing 26QB. TDS CPC has sent U/S 200A and raised demands under Section 156 for defaults and Section 234E for delays @ Rs.200/- per day.

Payment of Demand raised on delays and defaults:
Now TDS CPC has given the facility to make payment of demand raised against TDS on Sale of Property has been enabled.
To Pay Such Demand raised please click on

Contributed by Megha Bansal