A Guide to section 194-IA, Form 26QB and Form 16B

194IA-Header

Since the new rule popped up, and its applicability was dated from 1st June 2013, there was a confusion regarding the depositing the tax and claim of such tax deposited. Whether the deductor would have to apply for a TAN and how and when the tax is to be deposited?

As per section 194-IA, every person (even individuals) making a payment for consideration of an immovable property, not including agricultural land, will withhold tax @ 1% of the transaction amount (if the amount is  INR 50 Lacs or INR 5 Million or more).

On 31st May, this was made clear by the Central. As per notification no. 39/2013 dated 31 May 2013 the following things have been made clear:

  1. Depositing of withholding tax.
  2. Issuance of certificates for such tax
  3. Filing a return of withholding tax.

  Summary of section 194-IA and Notification no. 39/2013

Particulars

Rule

Deduction of Tax At the time of payment of a consideration of INR 50 Lacs (INR 5M) or more. (u/s 194-IA)
Deposit of Such Tax This tax, like all other sections, has to be deposited within 7 days from the end of the month in which the tax was deducted. (as per RULE 30(2)(A))
How to Deposit this Tax Tax is to be accompanied by a challan-cum-statement in Form 26QB , electronically, within the specified time. (in RBI, SBI or any other authorised bank) (as per Rule 30(6)(A))
Issuance of Certificate of withholding Tax Every person responsible for deduction of tax u/s 194IA shall furnish a certificate of TDS in Form 16B to the payee within 15-days from the due date for furnishing the challan-cum-statement in form 26QB (i.e. within 22days of the end of the month in which the tax was deducted) downloading the same from the web portal specified by DGIT.
TDS Return Not required.

The above would not require the payer to obtain a TAN as the Forms 26QB and 16B are to be filed using the PAN details of the parties to the transaction. Well this is a great move by the government to keep of a track of high value transactions.

Download the above in PDF Format: Guide on section 194-IA, Form 26QB and Form 16B.

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10 comments on “A Guide to section 194-IA, Form 26QB and Form 16B

  1. I require guidance on the following issue: Three A pieces of land which are adjoining each other are owned by A who has entered into three agreements with B for sale of lands at Rs. 40 lacs, Rs. 25 lacs and Rs.15 lacs. Thus the total cost of three lands is Rs. 80 lacs. The agreement is executed on different dates as also the registration of conveyance deeds shall also take place on different dates. Whether s. 194IA would apply in such a case. Would it be different if the documents are executed on same day. Thanks

    • Provisio to section is as under:-
      No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees
      This provisio has relation to a immovable property and not to the seller or buyer. In the above case, there are three properties each below Rs. 50 lacs. According to my opinion TDS shall not be applicable in the above case

  2. I have made payment towards TDS on purchase of property for amount paid after 01-June-2013 and got challan Form 26QB. Same was submitted to seller. I want to make Form 16B, but the TRACES website is not working. So what should I do as rule is Form 16B to be issued within 15 days. Can I make Form 16B from anywhere else?

  3. Two buyers of a property paying in installments. Do both buyers need to file Form 26QB? One buyer is a NRI and does not have a PAN number. Online it says both PAN numbers necessary

    • Sorry forgot to add: What to do in such a case? If only one buyer has a PAN while the other who is an NRI does not have a PAN card.

  4. Hi,

    Me and my brother have entered into an agreement to sale on Dec 12, 2013 and had paid the vendor some token advance. Now we have fixed our registration date as Feb 24, 2014 where the sale deed would also be entered. In form 26QB, when I key the agreement date as Feb 24, 2014 and the payment to vendor date also as Feb 24, 2014 it doesn’t accept saying the date cannot be future date.
    Now my query is this- Should I wait till Feb 24th morning and make the remittance and then go for registration, since the sub-registrar will not accept to register unless we show the TDS payment challan. Or should I key the date of agreement and date of payment to vendor as Dec 12, 2013 and make the TDS dating the current date.
    Appreciate if you could help me on this.
    Thanks,
    Hitesh

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