Received Notice for 26QB Statement not yet filed for Purchase of Property? How to reply and FAQ

What is TDS on property?

As per Finance Bill of 2013, TDS is applicable on sale of immoveable property wherein the sale consideration of the property is equal or exceeds or to 50,00,000 (Rupees Fifty Lakh). Sec 194 IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser/buyer of the property at the time of making payment of sale consideration. Tax so deducted should be deposited to the Government Account through any of the authorized bank branches.

What are the points to be remembered by the Seller of the Property?

Following are the points to be remembered by the seller of the property:

Provide a copy of PAN card to the Purchaser of the property for furnishing information regarding TDS to the Income Tax Department.

Verify taxes deducted by the Purchaser in Part A2 of your Form 26AS Annual Tax Statement.

Compare it with Form 16B issued by the Purchaser.

Download form 16B from TRACES only

 

What are the points to be remembered by the purchaser/buyer of the Property?

Following are the points to be remembered by the buyer of the property:

Deduct TDS @ 1% on the total sale consideration.

Collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.

PAN of seller as well as Purchaser/buyer should be mandatorily furnished in the online Form 26QB (statement cum challan form) for furnishing information regarding the sale transaction of valid PANs.

 

Is it mandatory to file form 26QB?

As per Finance Act of 2013, TDS is applicable on transfer of immovable property, wherein the consideration of the property exceeds or is equal to Rs 50 Lakhs. Sec 194 IA of the Income Tax Act, 1961 read with Rule 30, 31 & 31A of Income Tax Rules states that:

For all such transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration.

Tax so deducted should be deposited to the Government Account through e-tax Payment option (Netbanking) or any of the authorised bank branches. 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.

PAN of seller as well as Purchaser should be mandatorily furnished in an online Form (Form 26QB) for furnishing information regarding the property transaction. Facility for furnishing information regarding the transaction of sale of immoveable property and payment of TDS thereof is available on the website www.tin-nsdl.com.

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 into the Government Account. Form 16B will be available for download by Registering on the website of Centralized Processing Cell (TDS) www.tdscpc.gov.in.

 

I am a purchaser/buyer, whether I should deduct TDS on Property from the amount exceeding the property value of 50 Lakhs or on the whole amount of property sold?

TDS is to be deducted on the total amount paid or credited to the seller. For example, if an amount of property sold is 70 Lakh, TDS will be deducted on total amount of the property i.e. 70 Lakh and not on 20 Lakh.

Which challan is used for depositing the amount deducted under section 194IA?

The deducted amount can be deposited using ITNS-280 under the minor head-800.

 

What are Implications of Non/Late filing of TDS Statements?

For Buyer of Property: In case of default on account of Non / late filing of Form 26QB, a fee shall be levied u/s 234E of the Act. He shall be liable to pay, by way of fee, a sum of Rs. 200 (two hundred) for every day during which such failure continues. The buyer would also be liable for defaults of Late Deduction, Late Payment and Interest thereon. Penalty under S. 271H may also be levied on him by the Assessing Officer.

For Seller of Property: Non/ Late filing of Form 26QB results into the TDS Credit not being available to the seller for claiming the amount of tax already deducted from the payments made.

 

How will transactions of joint parties (more than one buyer/seller) be filed in Form 26QB?

Online statement cum challan Form/ Form 26QB is to be filled in by each buyer for unique buyer-seller combination for respective share. E.g. in case of one buyer and two sellers, two 26QB (statement cum challan) forms have to be filled in and for two buyers and two sellers, four 26QB (statement cum challan) forms have to be filled in for respective property shares.

For example: Ram and Shyam are the buyers /purchaser and Sohan and Mohan are the sellers. Ram will issue separate Form 16B to Sohan and Mohan each. Shyam will issue separate Form 16B to Sohan and Mohan each. So in this way four forms have to be filled in for respective property shares.

 

How all Defaults are calculated?

Along with the demand notice a Justification report is also send by TDS-CPC. Justification Report consists of various defaults/errors identified by the Income Tax Department (ITD) while processing the form 26QB filed by buyer for a particular transaction on sale of property of a financial year. It provides detailed information about the defaults/errors that needs to be rectified by buyer.

 

Taxpayer has not deducted any TDS on property as he has already paid the booking amount of property to the seller still he wants to pay the TDS. Can he pay the TDS amount?

Buyer should deduct and pay the TDS on Property. If buyer has not deducted while making payment to seller, in such case buyer has to recover the TDS on property from seller and deposit the same with late filing fee, late deduction and late payment interest.

 

Is late filing and interest on late payment applicable on NRI buyer as well?

Yes. As per Finance Bill of 2013, TDS is applicable on sale of immoveable property in India wherein the sale consideration of the property is equal or exceeds or to 50, 00,000 (Rupees Fifty Lakh). If any default occurs in payment of TDS amount, it will be closed by buyer.

 

I am trying for payment of late filing fee U/s 234E for form 26QB through on line mode. There is no column mentioned as Late filing fee in the challan. How can I proceed for making such payment?

Deductor can select 'other' option in the challan for making the payment of late filing fee u/s 234E if column for late filing is not available.

 

Can payment of TDS on property be made offline as many users do not have the facility of net banking?

While filing 26QB, user will get the option to make online or offline payment. User will select as per convenience.

 

What are the various types of defaults that may get generated on 26QB processing?

Ans. Following are the types of Defaults that may get generated on 26QB processing:-

  • 1. Short Deduction: Short deduction is computed when the rate at which TDS Deducted' is less than 1%.

Short Deduction Computation u/s 200A

Sr. No

Section Code

Amount Paid / Credited as per 26QB (Rs.)

TDS Deposited as per challan (s)(Rs.)

Rate at which Deposited as per 26QB (%)

TDS Rates as per Act(%)

TDS Deductible(1% * Amount Paid/credited as per 26QB)(Rs.)

Short Deduction (Rs.)(Col 7 - Col 4)

1

2

3

4

5

6

7

8

1

194IA

9252000.00

9252.00

0.10%

1%

92520.00

83268.00

  • 2.(a) Late Payment Interest: When deductor deposits the TDS after due date of challan deposit, it is a case of late payment and interest will be charged accordingly. Late payment interest will be charged @ 1.5% per month from the date of tax deduction to date of tax deposition.

Late Payment Interest Computation u/s 200A read with Sec 201(1A)

Sr. No

Date of Deduction as per 26QB(dd-mmm-yyyy)

Due Date for TDS Deposit(dd-mmm-yyyy)

Date of Deposit as Per OLTAS (Challan)(dd-mmm-yyyy)

TDS amount consumed from challan(Rs.)

Period of Delay in Months(Col 4 - Col 3)

Interest on Late Payment U/S 201 (1A)(Rs.)(Col 5 * Col 6 *1.5%

1

2

3

4

5

6

7

1

28-Feb-14

7-Mar-14

10-Mar-14

6620

1

99

* Due date of TDS deposit will be by 7th of the next month of the month for which transaction is reported.

  • 3.(a) Late Deduction Interest: When deductor does not deduct the TDS amount on the date of Payment/Credit, then, Interest on Late deduction is computed i.e. if the date of deduction is after the date of payment credit, then the late dedution interest is computed. Late deduction interest is charged @ 1% per month from date of transaction to date of tax deduction.

Late Deduction Interest Computation u/s 200A read with Sec 201(1A)

Sr. No

Date of Payment/credit as per 26QB(dd-mmm-yyyy)

Due Date of Deduction (dd-mmm-yyyy)*

Date of Deduction as Per 26QB(dd-mmm-yyyy)

TDS Deductible(1% * Amount Paid/credited as per 26QB)(Rs.)

Period of Delay in Months(Col 4 - Col 3)

Interest on Late Deduction U/S 201 (1A)(Rs.)(Col 5* Col 6)*1.%

1

2

3

4

5

6

7

1

27-Feb-14

27-Feb-14

10-Mar-14

6620

2

132

* Due date of deduction will be date of payment/credit whichever is earlier.

  • 3.(b) Interest on Short Deduction Short deduction interest is calculated @ 1% per month on Part of the month from the date on which tax was deductible to the date of the processing of statement. Please note that 'interest on Short Deduction' is provisional in nature. As you pay the short deduction default amount, the corresponding interest (i.e interest on short deduction) would be reversed and the "Interest on Late payment" or " Interest on late deduction" shall be levied appropriately, as the case may apply.

Short Deduction Interest Computation u/s 200A read with Sec 201(1A)

Sr. No

Short Deduction (Rs.)(as per Col 8)

Date of Payment/Credit as per 26QB(dd-mmm-yyyy)

Order Passed Date as per intimation(dd-mmm-yyyy)

Period of Delay in Months(Col 4 - Col 3)

Interest due to short deduction (Rs.)(Col 2 * Col 5 * 1%)

1

2

3

4

5

6

1

83268.00

7-May-14

12-Feb-16

22

18304.00

  • 4. Late Filing Fee: As per section 234E, where a person fails to file the TDS/TCS statement within the due date prescribed in this regard, and then he shall be liable to pay, by way of fee, a sum of Rs.200 for each day during which the failure continues. Fee amount will not exceed TDS deductible as per 26QB filed.

Late filing fee Computation u/s 234E

Sr. No

Due Date of Filing of 26QB*(dd-mmm-yyyy

Date of deposit of challan(dd-mmm-yyyy)

Delay in Filing(No. of Days) (Col 3- Col 2))

Fee per Day(Rs.)

Total Fee(Rs.)(Col4 * Col5))

Total TDS Deductible(1% * Amount Paid/credited as per 26QB)(Rs.)

Fee Payable = Min(Col 6, Col 7)(Rs.)

1

2

3

4

5

6

7

8

1

7-Mar-14

10-Mar-14

3

200

600

6620

600

* Due date of filing will be by 7th of the next month of the month for which transaction is reported.

Note:1) Interest is chargeable for every month or part of the month on the amount of such tax.
2) A month is considered to be a calendar month as per general clauses act

 

What is the procedure for payment of demand raised against TDS on sale of property by CPC-TDS?

Ans.The detailed procedure for payment of demand raised against TDS on sale of property by CPC-TDS can be seen at the TRACES website on the left panel of home page under "quick links" in menu "TDS on sale of Property" with sub heading "Procedure for Payment of TDS demand on sale of Property".

 

What is the detailed procedure for making online correction in 26QB form?

Ans. For stepwise 26QB correction you are requested to refer E-Tutorial available on TRACES. Please follow the following link:http://contents.tdscpc.gov.in/en/e-tutorial-taxpayer.html

 

Is there any approval required for online correction of 26QB statement? If yes, the details thereof?

Ans: If the buyer makes correction using Digital Signature Certificate (DSC), then there is no need of TDS assessing officer (AO)'s approval for making correction in any field of 26QB form. But, if the buyer doesn't make correction using Digital Signature Certificate (DSC), then following fields in 26QB online correction require approval of their TAN assessing officer (AO) :

  1. PAN of Buyer Details
  2. PAN of Seller Details
  3. Amount Paid/Credited - Amount payable to the Transferor/Seller
  4. Date of Payment/Credit ((Date of Payment to the Transferor/Seller). Note that the buyer will have to change the Financial Year as well if the changed Date of Payment/Credit lies outside the earlier financial year.
  5. Date of Tax Deduction



 

If the buyer wants to change the PAN of buyer but doesn't make correction using DSC, then after the successful submission of correction request, an approval request will be automatically sent simultaneously to both ,PAN of Seller and Updated PAN of Buyer and status will be shown as "Pending for PAN approval" in the inbox of buyer .After getting their approval ,an approval request will be automatically sent to the TDS assessing officer and status will be shown as "Pending for AO approval" in the inbox of the buyer. However, if the same request is made using DSC then AO approval will not be required and only approval from PAN of Seller and Updated PAN of Buyer will be required.

If the buyer wants to change the PAN of seller but doesn't make correction using DSC, then after the successful submission of correction request, an approval request will be automatically sent to the PAN of previous Seller and status will be shown as "Pending for PAN approval" in the inbox of buyer .After getting the approval of previous seller ,an approval request will be automatically sent to the TDS assessing officer and status will be shown as "Pending for AO approval" in the inbox of the buyer. However, if the same request is made using DSC, then AO approval will not be required and only approval from PAN of previous Seller will be required.

NOTE: In all the cases where approval by AO is required, the deductor will be prompted to approach the TDS assessing officer with hard copy of the correction request. The deductor/buyer should carry his Identity Proof &PAN Card along with the documents related to Transfer of Property and the proofs of payment made, for verification at the end of Assessing officer

 

Is the intimation letter and justification report sent by CPC-TDS password protected? If yes, what is the password to open the same?

Ans: Yes, the attached document containing the intimation letter and justification report sent by CPC-TDS is password protected. To open the PDF, enter the first four characters of your PAN in capital letters, followed by an underscore (_) and date of payment / credit in the format DDMMYYYY. For e.g., if your PAN is ABCD12345E and date of payment / Credit as regular statement is 30-Sep-2012, enter password as 'ABCD_30092012'.

 

For any query you can write to chirag@cachauhan.in before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.

 

 

 

 

 

 

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    I hope by reading this article you got enlighten on ,Received Notice for 26QB Statement not yet filed for Purchase of Property? How to reply and FAQIs it mandatory to file form 26QB?, What is TDS on property?, What are the points to be remembered by the Seller of the Property?, What are the points to be remembered by the purchaser/buyer of the Property?, What are Implications of Non/Late filing of TDS Statements?, How will transactions of joint parties (more than one buyer/seller) be filed in Form 26QB?, Is late filing and interest on late payment applicable on NRI buyer as well?, What are the various types of defaults that may get generated on 26QB processing?, Short Deduction Computation u/s 200A, What is the procedure for payment of demand raised against TDS on sale of property by CPC-TDS?, further to mention before taken any financial decision based on this content it is prefered to take an expert opinion as matter can be subjective.