How to make tds payment on purchase of property
The specific challan-cum-statement used to deposit TDS on property purchase under Section 194-IA is Form 26QB.
Procedure for TDS Payment on Property (Form 26QB)
This process is mandatory when the sale consideration or stamp duty value is ₹50 Lakh or more.
1. Preparation and Deduction
Obtain Seller’s PAN: The seller’s Permanent Account Number (PAN) is mandatory. Without a valid PAN, TDS must be deducted at a rate of 20% instead of 1%.
Calculate TDS: Deduct 1% of the total sale consideration (or stamp duty value, whichever is higher). Note: The deduction is on the total value, not just the amount exceeding ₹50 Lakh.
Timing of Deduction: TDS must be deducted at the time of payment or credit of the sale consideration to the seller, whichever is earlier.
2. Filing Form 26QB (The Challan-cum-Statement)
The buyer (deductor) must file this form online:
Portal: Go to the official Income Tax e-filing portal.
Path: Navigate to
e-Filerightarrowe-Pay Tax:New Payment: Select26QB (TDS on Sale of Property).Information Required: You will need to enter complete details for the following:
Seller’s Details: PAN, Name, and Address.
Buyer’s Details: PAN, Name, and Address (yours).
Property Details: Address, Date of Agreement, Total Value, and amount paid/credited
Tax Details: The calculated TDS amount.
Payment: Select the payment mode (
Pay Nowvia Net banking/Debit Card orPay Laterfor RTGS/NEFT/Bank Counter payment).
3. Key Compliance Requirement (Due Date)
Due Date for Filing & Payment: The Form 26QB and the TDS amount must be deposited with the government within 30 days from the end of the month in which the deduction was made.
Example: If TDS was deducted on March 15, the due date for filing Form 26QB and making the payment is April 30.
4. Issuing the TDS Certificate (Form 16B)
This is the final critical step to complete the compliance cycle.
What is it? Form 16B is the certificate issued by the buyer (deductor) to the seller (deductee) as proof that the tax has been deposited.
Process: After 5-7 days of depositing the TDS, the buyer can register and log in to the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System).
Download: Use the
DownloadsmenuForm 16B (For Buyer)to generate and download the certificate using the Acknowledgment Number of Form 26QB and the seller’s PAN.Issuance: The buyer must issue this Form 16B to the seller.
That’s a crucial aspect of compliance! Failure to adhere to the TDS requirements under Section 194-IA (Form 26QB) can result in significant financial consequences for the buyer (deductor) in the form of interest and penalties.
The penalties fall into three main categories:
1. Interest on Delay (Under Section 201)
Interest is levied for two types of default related to the timely handling of the TDS amount. It’s calculated on the TDS amount for every month or part of a month.
| Default Type | Section | Interest Rate | Calculation Period |
| Late Deduction (Tax not deducted on time) | 201(1A)(i)} | 1% per month | From the date TDS was required to be deducted (time of payment/credit) until the date the tax is actually deducted. |
| Late Payment (Tax deducted but not deposited on time) | 201(1A)(ii)} | 1.5% per month | From the date the tax was actually deducted until the date the tax is actually deposited with the Central Government (through Form 26QB). |
Note: If there is a delay in both deduction and payment, both interest rates apply sequentially for their respective periods.
2. Late Filing Fee (Under Section 234E)
This is a mandatory fee for the late submission of the Form 26QB challan-cum-statement.
Fee Rate: ₹200 per day for every day the failure to file continues.
Cap: The total fee cannot exceed the actual TDS amount deductible for that transaction.
3. Penalties (Under Section 271H)
Apart from the daily late fee under Section 234E, the Assessing Officer (AO) has the power to impose an additional penalty for failure to file Form 26QB.
Penalty Range: Minimum of ₹10,000 which can be extended up to ₹1,00,000.
Applicability: This penalty can be levied for:
Failure to file the Form 26QB statement on time.
Filing a statement with incorrect information (e.g., wrong PAN, wrong amount).
Consequence for the Seller
While the buyer bears the interest and penalties, the primary consequence for the seller in case of a delay or non-filing by the buyer is that they cannot claim the TDS credit in their Income Tax Return (ITR) until the Form 26QB is correctly filed and Form 16B is issued. The TDS credit reflects in the seller’s Form 26AS only after the buyer deposits the tax and files the statement.
That’s an excellent way to solidify the understanding of these provisions. Let’s walk through an example to see how the interest and fees accumulate.
Example Calculation of Interest and Penalties
Scenario Details
| Particular | Value |
| Sale Consideration | ₹80,00,000 |
| TDS Rate (194-IA) | 1% |
| TDS Amount Due | ₹80,000 |
| Date of Deduction (Time of Payment) | March 10 |
| Due Date for Deposit (30 days from end of March) | April 30 |
| Actual Date of Deposit (Filing 26QB) | July 15 |
1. Interest for Late Payment (Section 201(1A)(ii) – 1.5% p.m.)
Since the tax was deducted on March 10 but not paid until July 15, there is a delay in deposit.
Period of Delay: From May 1 to July 15 (due date to actual payment).
May: 1 month
June: 1 month
July: 1 month (part of a month counts as a full month)
Total Delay: 3 months
- Interest Calculation:Interest = TDS Amount X Rate X MonthsInterest = ₹80,000 X 1.5% X 3 months = ₹3,600
2. Late Filing Fee (Section 234E – ₹200 per day)
The Form 26QB was due on April 30 but was filed on July 15.
Period of Delay: From May 1 to July 15.
May: 31 days
June: 30 days
July: 15 days
Total Delay: 76 days
- Late Fee Calculation: Late Fee = Days of Delay X ₹200 /dayLate Fee = 76 daysX ₹200 = ₹15,200
3. Total Additional Liability for the Buyer
| Liability Type | Amount |
| 1. Interest (1.5% p.m.) | ₹3,600 |
| 2. Late Filing Fee (₹200/day) | ₹15,200 |
| Total Liability (Excluding original TDS) | ₹18,800 |
Key Takeaways for Compliance
Late Filing Fee Cap: The ₹15,200 fee calculated above is valid because it does not exceed the original TDS amount of ₹80,000.
Late Deduction: In this example, the buyer deducted the tax exactly when they made the payment (March 10), so no interest for late deduction (1% p.m.) was charged. If they had paid the seller ₹80,00,000 on March 10 but only deducted the ₹80,000 on March 25, the 1% interest would have applied for the 15-day period (counted as 1 month).
Section 271H Penalty: This calculation is only for the statutory interest and late fee. The Assessing Officer still has the discretion to impose the penalty under Section 271H (up to ₹1,00,000) for the failure to file the statement on time.