Form 16B – TDS certificate for sale of property

Under Income Tax, Form 16 represents the certificate which certifies that TDS has been deposited for the specified transactions. Different types of Form 16 certificates are to be provided for different categories of transactions / payments as detailed hereunder –

1. Form 16 – TDS certificate for salary

2. Form 16A – TDS certificate for income / payment other than salary

3. Form 16B – TDS certificate for sale of property

4. Form 16C – TDS certificate for rent

The present article would try to cover up all the provisions relating to TDS certificate in Form 16B. It also covers Frequently Asked Question (FAQ) with reference to Form 16B for better and easy understanding.

Before understanding Form 16B, it is important to understand provisions of section 194-I of the Income Tax Act, 1961. Since the deductor who is responsible for deducting TDS, as per provisions of section 194-I, is required to issue TDS certificate in Form 16B to the deductee. Provisions of section 194-I of the Income Tax Act, 1961 are explained hereunder –

Applicability of Section 194IA –

Provisions of Section 194-IA of the Income Tax Act, 1961 gets attracted if the following conditions are satisfied –

• There is a transfer of immovable property (other than agricultural land).
• Purchaser is responsible for paying the consideration to a ‘resident’ seller for transfer of the immovable property.
• Consideration, payable for the transfer of immovable property, is INR 50 Lakhs or more.

If all the above conditions are satisfied, the purchaser is liable to deduct tax at source (TDS). TDS is to be deducted by the purchaser at the time of credit of such sum to the account of the seller or at the time of payment of such sum in cash or cheque or draft or any other mode.

Rates of TDS in case provisions of section 194-IA are attracted –

If the provisions of section 194-IA get attracted, the purchaser is required to deduct tax (TDS) @ 1%.

However, as per provisions of section 206AA of the Income Tax Act, if the seller doesn’t provide Permanent Account Number (PAN), in that case, the purchaser is required to deduct tax @ 20%.

Consequence if provisions of section 194-IA get attracted –

If provisions of section 194-IA get attracted, the purchaser would be liable to deduct tax (TDS) @ 1% and deposit the same to the Government.

Generally, if TDS provisions get attracted, as per section 203A of the Income Tax Act, the deductor is required to obtain ‘Tax deduction and collection account number’ i.e. TAN. However, sub-section (3) to section 194-IA clearly states that provisions of section 203A of the Income Tax Act, 1961 shall not apply to the person who are required to deduct tax in accordance with the provision of this section. Which means that the purchaser / deductor, who is required to deduct TDS as per provisions of section 194-IA, is not mandatorily required to obtain TAN.

Now, the obvious question that would emerge in anyone’s mind is, how would the purchaser / deductor deposit the TDS so deducted to the Government and issue TDS certificate, in case the purchaser / deductor doesn’t have a TAN?

The Government has provided a specific way for the purchaser / deductor who is required to deduct TDS as per provisions of section 194-IA and such purchaser / deductor is not having TAN. In that case, the purchaser / deductor is required to make payment of TDS by filing Form 26QB. Further, the purchaser / deductor is required to issue a certificate of tax deduction in Form 16B.

Frequently Asked Questions (FAQ) on Form 16B

1. What is Form 16B?

Form 16B is a TDS certificate which is to be issued by a purchaser / deductor to the seller / deductee certifying that the amount of tax deducted at source during property purchase has been deposited with the Government.

2. How to download Form 16B by the taxpayer?

The buyer of the property (deductor) can download Form 16B after getting registered on TRACES as the taxpayer. Form 16B can be downloaded online using TRACES website by following the below mentioned steps –

• Visit site https://contents.tdscpc.gov.in/;
• Click on Login icon;
• Provide appropriate username and password;

Please note if the taxpayer is not registered on TRACES website, he is first required to get himself register by clicking ‘Register as New User’.

• Navigate the path Downloads > Form 16B (For Buyer).
• After navigating the above path, following details needs to be provided in order to download Form 16B –
  • Assessment Year;
  • Acknowledgement No. of the FORM 26QB;
  • PAN of the Seller
• By following the above steps, FORM 16B would be available in the Requested Downloads Section under the Downloads Category.

3. How can I open Form 16B?

Once the Form 16B is downloaded, an appropriate password needs to be entered in order to open the same. Password for the opening of Form 16B is Date of Birth of the Buyer.

Date of Birth of the Buyer needs to be entered in DDMMYYYY format. For example Date of Birth of the Buyer is say 10^th October, 1984, then, the password for the opening of Form 16B would be 10101984.

4. What is Form 16B in India?

Form 16B in India certifies that the amount deducted by the buyer in the form of TDS on the property has duly been deposited with the Government.

5. Is Form 16B mandatory?

Yes, Form 16B is mandatory. If the same is not issued Form 16B penalty would be levied.

6. What is Form 16B due date?

Buyer (i.e. deductor) is required to issue Form 16B to the seller (i.e. deductee) within 15 days from the due date for furnishing of challan-cum-statement in Form 26QB.

7. What is Form 16B Penalty?

As seen above, Form 16B due date is 15 days from the due date of furnishing of challan-cum-statement in Form 26QB, in case of failure, Form 16B penalty leviable would be INR 100 per day during which the failure continues.