A Complete Guide to Form 16B

What is Form 16B?

Form 16B is a TDS certificate issued for tax deducted at source on the sale of the property. As per the Income Tax Act, in a sale of the property, the buyer has to calculate and deduct the TDS from the total sale value while making the payment and deposit it with the Income Tax Department. Then they have to issue the Form 16B to the property seller.

The tax deducted at source or TDS on the sale of an immovable property falls in Section 194 IA of the Income Tax Act, 1961. TDS, however, is applicable only when the consideration value is more than 50 lakhs. For agricultural property and property sale values below ₹50 lakhs, no TDS needs to be deducted by the property buyer while purchasing the property. According to Section 194 IA of the Income Tax Act, 1% TDS needs to be deducted by the property buyer while making the payment to the property seller.

Once the TDS amount is paid to the Income Tax Department, the buyer must issue Form 16B to the property seller. This acts as proof that TDS has been deducted and successfully paid to the IT department.

To avoid this confusion between Form 16, Form 16A and Form 16B, we have explained it in simple terms below:

• Form 16 is the certificate issued to salaried employees for the TDS deducted on their salary.
• Form 16A is the certificate issued for TDS deducted on all Non-salary sources of income. 
• Form 16B is the certificate issued for TDS deducted on the sale of a property, excluding agricultural property.

Form 16B TDS can be easily downloaded from the TRACES (TDS Reconciliation and Analysis and Correction Enabling System) website. The buyer can download the form after making the TDS deposit and filling up the Form 26QB.

Due date to issue Form 16B

The deductor or the buyer of the property has to issue Form 16B to the seller or the deductee within 15 days after the due date of receiving Form 26QB. The due date of receiving Form 26QB is 30 days from the last day of the month of deduction.

How to download Form 16B from TRACES

• Go to the TRACES website and log in as a taxpayer.
• If you are a first-time visitor to the website, then you will need to register yourself first as a taxpayer and submit all the necessary documents to create an account.
• The verification details you submit will get validated. After the verification, your account will get created.
• The PAN number will be the username, and you can enter a password of your choice.
• After you enter the details, you will receive an activation link on your registered email address. Plus, you will receive a code on the registered mobile number. Click on the activation link and enter the code sent to your mobile number to activate your account.
• Once the account is created, log in and go to the download section, and select the option ‘Form 16B (For Buyer)’.
• Enter the PAN number of the seller, an acknowledgement number of Form 26QB, assessment year and other details.
• After you submit the details, Form 16B download option will become available in the download category.
• The form can be downloaded, saved and printed as well.

The buyer can access information about the TDS deducted with the help of Form 26AS. Form 26AS is similar to a consolidated statement which reflects the total TDS deducted under the given PAN number. Thus, it will contain the details as reflected in Form 16, Form 16A and Form 16B.

When is Section 194 IA applicable?

• Transfer of any immovable property. This includes any land (excluding agricultural land), building or part thereof inside the Union of India. Agricultural land is defined under Section 2(14) (iii) (a)/ (b) of the Income Tax Act, 1961.
• Transfer of any immovable property on or after 1st June 2013.
• The value or sale consideration of the sale property is higher than ₹50 lakhs.
• As per Section 194 IA, it is the buyer’s responsibility to deduct tax from the total sale consideration while making the payment. Any Indian citizen who wishes to buy a property within the Union of India would be required to deduct TDS before paying the consideration amount to the property seller.
• The rate of TDS deduction is 1% of the total consideration value of the purchase. For instance, if the value under consideration is ₹60 lakhs, then 1% TDS is applicable on the full sum of ₹60 lakhs and not just on the sum that exceeds the threshold of ₹50 lakhs. 
• The TDS amount must be deducted during actual payment or while crediting money, whichever comes earlier.

Therefore, Section 194 IA applies to every including individual. But some individuals, who do not require tax audit as per Section 44AB, are exempted from tax deduction at source from every section of the Income Tax Act. Therefore, such individuals don’t need a TAN.

Form 26QB 

Usually, individual taxpayers are party to property transactions. And it is not particularly feasible for individuals to obtain a TAN number for such one-time property transactions. Hence, the Income Tax Department has provided the option of paying the TDS by filing the Form 26QB and then issuing the TDS certificate Form 16B income tax.

The Form 26QB can be found under the e-payment section of the TIN or Tax Information Network of the Income Tax Department. You can fill the form online, then pay the taxes with the help of the e-payment gateway, or you can submit the Form 26QB at an authorised bank.

The details that you need to mention in Form 26QB include:

• Assessment year and financial year of the transaction
• Payment type for TDS on sale of property
• Whether the amount is paid by non-corporate or corporate
• Seller’s resident status (‘Non-Resident’ or ‘Resident’)
• Buyer’s PAN details — After the PAN number is filled, the status of the transferee (corporate, individual, etc.) gets auto-populated along with their name that is already registered with the database of the Income Tax Department. PAN number is the most crucial required information. Thus, you must be extra careful while filling the PAN details. 
• Additional information like the address, mobile number and email ID
• Details of the purchased property
• Agreement date, total consideration value, payment type (instalment or lump sum)
• Details of the amount credited/paid, and the TDS amount followed by the date of TDS deduction
• To make an online payment, the buyer must choose the option ‘e-tax payment’ as the payment method. Next, choose an authorised bank for making the online tax payment. There is a list of authorised banks that the buyer can use to pay the TDS online. 
• The buyer also has the option to pay offline at the bank branch. They need to download the filled up Form 26QB and approach the nearest authorised bank branch to make the TDS payment.

After the TDS payment is made at the bank, the challan gets generated, which contains the details such as Challan number, bank name, the amount paid, payment date, etc.

So, this is everything you need to know about Form 16B. Essentially, the buyer has to issue the Form 16B to the seller, after deducting the TDS, while making the payment towards the bought property, and deposit the TDS amount with the Income Tax Department.