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How to deduct TDS for a property payment

TDS – Tax Deducted at Source

After the purchaser transfers the money to the seller, the purchaser must file for TDS on the agreed amount.

eg: If an agreement of sale of an immovable property is for INR 1,00,000 (One lakh Rupees), then a TDS of 1% must be filed by the buyer.

Steps involved

  • Buyer must transfer INR 99000 to the seller.
  • Buyer must file a TDS of INR 1000 via the IT portal

How should the buyer file for the TDS?

Step 1: Log in to your account on the Income Tax  IT portal. Select e-File > click on e-Pay Tax from the dropdown as shown below

Step 2: Click on ‘+ New Payment’

Step 3: Click on the proceed button on the tab ‘26QB- TDS on Property’ as highlighted below

Note: In the next few steps, you will have to add the following details:

  • Add Buyer’s Details
  • Add Seller’s Details
  • Add Property Transferred Details
  • Add Payment Details 

Step 4: Add Buyer’s Details

All your details will be auto-filled, but you can also change them if needed. After entering the details, click on ‘Continue’

Step 5: Add Seller’s Details

Add all the details of the Seller like their PAN, address

Step 6: Add Property Details

Add all the property details like type, address and also the sale details like date of agreement, value etc. The tax amount will be calculated automatically. Once done, click on ‘continue’

Step 7: Add Payment Details

Select the payment mode and proceed to complete the payment. Once the payment is done, a challan will be generated.

Step 8: Register in TRACES 

  • If you are a first-time user, register on TRACES as a Tax Payer with your PAN and the Challan details of the tax payment.
  • Once you register, you will be able to obtain approved Form 16B (TDS certificate) and you can issue this Form to the Seller.
  • Check your Form 26AS seven days after payment. You will see that your payment is reflected under “Details of Tax Deducted at Source on Sale of Immovable Property u/s 194(IA) [For Buyer of Property]”.
  • Part F gives you details such as TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgement number (which is the same as the one on your Form 26QB), date of deposit and TDS deposited.

Step 9: Download your Form 16B

  • After your payment in Form 26AS has been reflected, log in to TRACES. Go to the Download tab at the tab and click on “Form-16B (for the buyer)”.
  • To finish this process, fill PAN of the seller and acknowledgement number details pertaining to the property transaction and click on “Proceed”.
  • Verify all the details once and click on “Submit a request”
  • After a few hours, your request will be processed. Click on the Downloads tab and select Requested Downloads from the drop-down menu.
  • You should be able to see that the status of your Form 16B download request is ‘available‘.
  • If the status says ‘submitted‘ wait for a few hours more before repeating the last step.
  • Download the ‘.zip file’. The password to open the ‘.zip file’ is the date of birth of the deductor (the format is DDMMYYYY). Your form will be available inside the .zip file as a pdf. Print this out.

Download the statement and the challan for reference and documentation.