Section 194-IA is very familiar but tricky section to implement in real life. Though it is effected from year 2013, so many people are still unaware about many different things related to 194-IA and hence today I am writing this all inclusive article on Section 194-IA which will include everything from basic section, its compliance, any correction on traces, obtaining TDS certificate and also if there is any 2nd correction is possible for this section or not, etc. So, let’s get started!

What is Section 194-IA is all about?

As per Finance Bill of 2013, TDS is applicable on sale of immoveable property wherein the sale consideration of the property exceeds or is equal to ₹ 50,00,000. 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 (depending upon the Date of Payment/Credit to the Seller) 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 any of the authorised bank branches.

Detailed Analysis of TDS under Section 194-IA

Note: Due to COVID-19, the rate of TDS is reduced upto 0.75% from 14 May, 2020 to 31st March, 2021

Steps to fill form 26QB for payment of TDS.

1. Go to TIN NSDL website​ (www.tin-nsdl.com ).​

2. Under ‘TDS on sale of property’, click on “Online form for furnishing TDS on property (Form 26QB)” or click here

3. Select the applicable challan as “TDS on Sale of Property“.

4. Fill the complete form as applicable.

(User should be ready with the following information while filling the form 26QB :

  • PAN of the seller & buyer
  • Communication details of seller & buyer
  • Property details
  • Amount paid/credited & tax deposit details

5. Submit the duly filled form to proceed. ​A confirmation screen appears. After confirming, a screen appears showing two buttons as “Print Form 26QB” and “Submit to the bank”. A unique acknowledgement number is also displayed on the screen. It is advisable to save this acknowledgment number for future use.

​​6. Click on “Print Form 26QB” to print the form if you want to make payment by depositing tax through authorized banks.

or

click on “Submit to the bank” to make the required payment online through internet banking. Then proceed to the payment page through internet banking facility of various banks.

For list of authorized banks, please refer https://onlineservices.tin.egov-nsdl.com/etaxnew/Authorizedbanks.html

7. On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment ​being made.

Steps to Download TDS Certificate i.e. Form 16B:

1. Register & login on TRACES portal ( www.tdscpc.gov.in) as taxpayer using your PAN.

2. Select “Form 16B (For Buyer)” under “Downloads” menu.

3. Enter the details pertaining to the property transaction for which Form 16B is to be requested. Enter the Assessment Year, Acknowledgment Number, PAN of Seller and click on “Proceed”.

4. A confirmation screen will appear. Click on “Submit Request” to proceed.

5. A success message on submission of download request will appear. Please note the request number to search for the download request.

6. Click on “Requested Downloads” to download the requested files.

7. Search for the request with request number. Select the request row and click on “HTTP download” button. ​​​​​

8. Open the file and sign the TDS certificate and issue to the buyer.

If Seller/Deductee is a Non Resident:

1. TDS is required to be deducted as per provisions of section 195 of Income tax Act, 1961

2. All details regarding the transactions related to TDS on Property are required to be furnished in Form 27Q statement as ‘Long/Short Term Capital Gain‘. For 27Q, Buyer/Deductor need to apply for TAN

3. After depositing the TDS, the Buyer/Deductor of the property would also be required to issue Form 16A to the Seller of the property in respect of the TDS deducted and deposited in the central government account.

If More than 1 Buyer or 1 Seller

In case there is more than 1 buyer and the individual purchase price of each buyer is less than Rs. 50 Lakhs, but the aggregate value of the transaction exceeds Rs. 50 Lakhs, Section 194IA would be applicable and the TDS on Property would be required to be deducted and deposited with the govt before the due date. 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 forms have to be filled in and for two buyers and two seller, four forms have to be filled in for respective property shares.

How to file correction of Form 26QB for 1st time?

Step 1 : Login to TRACES website with your “User ID”, “Password” and the “Verification Code”. Landing page will be displayed on Screen.

Step 2 : Select option “ Request for Correction” under “Statements/ Forms” tab to initiate correction request. 26QB checklist will display on next screen. After clicking on “Proceed” Pop-Up window will display (If DSC is not registered).

Step 3 : Enter relevant “Assessment Year”, “Acknowledgement Number” and “PAN of Seller” according to filed Form 26QB, then Click on “File Correction” to submit request for correction. Request number will generate after submission of Correction Request.  User can check Requested Status in “Track Correction Request” option under “Statements/ Forms” tab.

Step 4 : Go to “ Track Correction Request” option under “Statements/ Forms” tab and initiate correction once the status is “ Available”. Click on “Available” status to continue.

Step 5 : Mention CIN details as per challan paid against 26QB then click on “Proceed” .

Step 6 : User can select on “Financial Year and Tax applicable” option to change F.Y in 26QB. After clicking on “Edit” button. Message will pop up on the screen. Click on “Save” to save updated details then click on “Submit Correction Statement” (Select tab accordingly in which user want to do edit details).

Step 7 : Screen will display to “Confirm details” after Submission of Correction Statement (Updated details will be highlighted in Yellow Colour).

Step 8 : Profile details will be populated as updated on Traces. Click on “Submit Request” to Submit Correction Request.

Step 9: After submission of Correction Request if DSC is not registered user gets the option to validate correction through EVerified (Internet Banking) or AO Approval OR if DSC is registered user gets the option to validate correction through E-Verified (Internet Banking), AO Approval OR DSC.

NOTE:

After submitting the Correction, a Correction ID will be generated through which status of correction can be tracked.

If DSC is not registered, user has to submit below mentioned documents to Jurisdictional AO for verification:

1. Furnish hard copy of Acknowledgement of form 26QB correction along with Identity Proof.

2. PAN Card.

3. Documents related to Transfer of Property.

4. Proofs of payment made through Challan for 26QB.

OR

With “E-Verified (Internet Banking) Service” user can submit 26 QB Correction statement without approval from Assessing Officer and without using DSC. (E-Verified Service option is not available for NRI Taxpayers).

Some Important things related to 1st time correction in Form 26QB:

1. Only Buyers registered on TRACES can submit request for “26QB correction” under “Statements/Forms ” Tab.

2. Fields of 26QB in which Correction is allowed as follows :

  • PAN of Buyer
  • PAN of Seller
  • Financial Year
  • Amount Paid/Credited
  • Date of Payment/Credit
  • Date of Deduction
  • Property Details –(Complete Address of the Property)
  • Total Value of Consideration (Property Value)

3. If Buyer files 26QB Correction and “Seller” is known , correction can be submitted through E-Verified (Internet Banking) /AO Approval/ DSC (If Buyers DSC is registered) for updating PAN details (Buyer /Seller).

4. If Digital Signature is not registered and Buyer or Seller is non Traceable , the correction request can be submitted through AO Approval option for updating PAN details (Buyer/ Seller).

5. If Digital Signature is not registered, Buyer or Seller is known , the correction request can be submitted through E-Verified (Internet Banking) /AO Approval option for updating PAN details (Buyer Seller).

6. If PAN of Seller requires to be updated, the correction request will require “Previous Seller’s” approval.

7. If PAN of Buyer requires to be updated, the correction request will require Seller’s” and intended (New) Buyer approval.

8. If both PAN of Seller and Buyer require to be updated, the correction request will require approval from Previous Seller and intended (New) Buyer.

9. If Amount Paid/Credited is updated, the correction submitted will require Seller’s Approval.

10. Jurisdictional AO will be decided on the bases of Buyer’s PAN’s (PAN submitting the correction) Jurisdiction.

11. If user is doing 26QB correction for the First Time or Second Time in Seller’s PAN +Amount Paid /Credit, Correction request will be directly submitted for A.O. Approval.

12. If user is doing 26QB correction for the First Time or Second Time in Buyer’s PAN + Seller’s PAN + Amount Paid/ Credit request will be directly submitted for A.O. approval.

How to file correction of Form 26QB for 2nd time?

Generally, everyone knows the process for the 1st time correction, but in case the mistake is happened again and there is requirement for 2nd time correction then how to file correction for 2nd time? Is this possible?

Process for filing correction request for 2nd time on TRACES:

Step 1: Login to TRACES website with your “User ID”, “Password” and the “Verification Code”. Landing page will be displayed on Screen.

Step 2: Select option “Request for Correction” under “Statements/ Forms” tab to initiate correction request. 26QB checklist will display on next screen. After clicking on “Proceed”.

Step 3 : Enter relevant “Assessment Year”, “Acknowledgement Number” and “PAN of Seller” according to filed 26QB, then Click on “File Correction” to submit request for correction. Request number will generate after submission of Correction Request. User can check Requested Status in “Track Correction Request” option under “Statements/ Forms” tab.

Step 4 : Go to “Track Correction Request” option under “Statements/Forms” tab and initiate correction once the status is “Available”. Click on “Available” status to continue.

Step 5 : Mention CIN details deposited against 26QB statement and click on “Proceed”.

Step 6 : User can select “Financial Year and Tax applicable” option to change F.Y in 26QB. After clicking on “Edit” button. Message will pop up on the screen. Click on “Save” to save updated details then click on “Submit Correction Statement” (Select tab accordingly in which user want to do edit details).

Step 7 : Screen will display to “Confirm details” (Updated details will be highlighted in Yellow Colour).

Step 8 : After confirming the details a message will pop-up on screen that is A.O. details will be available on “Track Request” screen under “26QB”, once the ”Correction Status” appears as “Pending for A.O. approval”.

Step 9 : Profile details will be populated as per TRACES Profile. Click on “Submit Request” to Submit Correction Request.

Step 10 : After submitting the Correction, a Correction ID will be generated through which status of correction can be tracked in “Track Correction Request” under “Statement/Forms”.

Step 11 : Correction status will be “Pending for AO Approval”. User can check AO details in “AO Detail” column under “Track Correction Request” option.

Step 12: After Approval from A.O. correction will be “Submitted to ITD”.

Step 13 : Final Correction status will be “Processed”.

NOTE:

1. Furnish hard copy of Acknowledgement of form 26QB correction along with Identity Proof.

2. PAN Card.

3. Documents related to Transfer of Property.

4. Proofs of payment made through Challan for 26QB to jurisdictional AO for verification

How to put refund request for Form 26QB Refund?

Step 1: Login to TRACES website and landing page will be displayed.

Step 2: Click on “Request for Refund” under “Statements / Forms” tab

Step 3: Before submitting the refund request go through the checklist and click on “Proceed”.

Step 4: Select Appropriate reason for raising the Refund Request, Click on “ Add Challan” after selecting appropriate reason for raising Refund Request.

Step 5: Give challan details for which Taxpayer wants to claim refund.

Step 6: Check Challan consumption details and click to “ I agree” for the declaration and click on Proceed.

Step 7: Enter Bank Details and click on “Proceed” option.

Step 8: Verification Page will be displayed and click on “Proceed” option.

Step 9: Confirmation Page : Click on “Submit Refund Request” to continue TDS refund request and validate refund request via  “Digital Signature”.

Step 10: Successful message will be displayed and click on “Preview and Print Form 26B acknowledgement.

Step 11: Request will be available under “Track Refund Request” and search refund request either through search option 1 or search option 2 with refund status and remarks.

Some Important points related to Refund of Form 26QB:

1. Taxpayer can apply for 26QB refund from Assessment Year 2014-15 onwards.

2. It is mandatory to validate the details by digital signature on TRACES to submit the Refund Request.

3. Maximum refund amount will be the available challan balance.

4. Sum of maximum refund amount should be greater than Rs. 100 in a refund request.

5. Refund request can be submitted for OLTAS Challan (s) where available amount in challan is equal to or more than Rupee 1 /-.

6. Ensure that statement cum challan in which the challan(s) has/have been claimed have been processed before claiming refund for the challan.

7. Refund cheque will be issued in the Name and Address of the Taxpayer as per TRACES profile.

8. No outstanding demand should be present on buyer’s PAN/TAN associated with PAN (who are submitting refund request).

9. Ensure that all the details filled in 26QB statement cum challan are true and correct as correction wouldn’t be allowed after raising refund request.

  • Refund request cannot be placed if correction request for the same acknowledgement is under process or initiated.
  • Refund request can consist of maximum 5 challan‟s for same Assessment year at a time. For different assessment year user need to place a Separate request for refund.
  • While raising refund request assessment year should be as per 26QB statement cum challan filed.

How to put refund request for Form 26QB Refund in case of NRI?

Step 1 : Login to TRACES website and landing page will be displayed.

Step 2 : Click on “Request for Refund” under “Statements/Forms” tab

Step 3 : Before submitting the refund request go through the checklist and click on “Proceed”.

Step 4 : Select Appropriate reason for raising the Refund Request, Click on “ Add Challan” after selecting appropriate reason for raising Refund Request.

Step 5 : Give challan details for which Taxpayer wants to claim refund.

Step 6 : Check Challan consumption details and click to “ I agree” for the declaration and click on Proceed.

Step 7 : Enter Bank Details and click on “Proceed” option.

Step 8 : Verification Page will be displayed and click on “Proceed” option.

Step 9 : Confirmation Page : Click on “Submit Refund Request” to continue TDS refund request and validate refund request via “Digital Signature Certificate”.

Step 10: Successful message will be displayed.

Step 11: Request will be available under “Track Refund Request” and search refund request either through search option 1 or search option 2 with refund status and remarks. Also, click on “Preview and print form 26B acknowledgment”.

Some Important points related to Refund of Form 26QB in case of NRI:

1. NRI Taxpayer can apply for 26QB refund from Assessment Year 2014-15 onwards.

2. It is mandatory to validate the details by digital signature on TRACES to submit the Refund Request.

3. Maximum refund amount will be the available challan balance.

4. Sum of maximum refund amount should be greater than Rs. 100 in a refund request.

5. No outstanding demand should be present on buyer’s PAN/TAN associated with PAN (who are submitting refund request).

6. Ensure that all statement wherein the challan(s) has / have been claimed must be processed before claiming refund.

7. Ensure that all the details filled in 26QB statement cum challan are true and correct as correction wouldn’t be allowed after raising refund request.

8. Refund request cannot be placed if correction request for the same acknowledgement is under process or initiated.

9. Refund request can consist of maximum 1 challan for Assessment year at a time. For different assessment year user need to place a separate request for refund.

  • While raising refund request assessment year should be as per 26QB statement cum challan filed.
  • Refund cheque will be issued in the name of the buyer’s and address as per TRACES profile.

What are the Consequences for Non-Compliance with Section 194-IA?

Interest on Late Deposit of TDS on Property

In case the TDS has not been deducted, the buyer would be required to pay 1% interest per month on the amount not deducted. In case, the TDS has been deducted but has not been paid, Interest @ 1.5% per month would be applicable in such a case.

Penalty for Late Deposit of TDS on Property

The Income Tax Officer may also levy a penalty of upto Rs. 1 Lakhs for Late Deposit of TDS on Property.

Penalty for Late Filing of Form 26QB – 

In case of late filing of TDS Return, a penalty of Rs. 200 per day would be levied. However, the Penalty should not exceed the amount of TDS for which this Form has not been filed.

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