As per Section 194-IA of the Income Tax Act, it is stated that when a buyer tries to buy some immovable property such as, buildings or any other land, which costs more than 50 Lakhs, it is essential for the buyer to deduct TDS when paying the seller. This TDS should be 1% of the total sale price of the property which is to be bought.
This deducted TDS is then to be deposited in the accounts of various authorities in the income tax department. This whole process can be a bit complicated and we are here to ease it out for you. You just have to follow the following steps:
1. If you are a buyer of property, then you would have to fill a form 26QB within 7 days starting from the month when the lawyer deducts the TDS. This form can be found both online and offline. Also a form 16B must be provided to the seller by the buyer as proof.
2. The criteria mentioned in the 26QB form, which incorporates details about the name, address, status and PAN card number of the buyer, details of property in question and the considered amount plus the TDS decided, should be filled up very carefully. Please note that all these criteria are mandatory to be filled and must be mentioned in the form.
3. Several modes of payment such as Net Banking or offline in the bank branch are available. In case of E-tax payment, the payer has to retain the receipt given to him by the bank branch while paying. In case the payment is made in instalments then TDS should be deducted on each one of them.
4. With all the necessary forms filled and payment done, the forms 26QB and 16B which are approved can be downloaded.
All these steps are valid when the property is real estate. However, agricultural lands are not included in these provisions. Also when PAN is not provided by the buyer, 20% TDS is deductible.