Since June 1st,  2013, Indian Income Tax dept. has made mandatory to deduct 1% TDS if the property you are buying is more than 50 Lakhs. I see there is a lot of confusion amongst people regarding how and what to fill in the various fields provided in the form of Tax Information Network (TIN) website.

Some points before we start

  1. The online form available on the TIN website for furnishing information regarding TDS on property is termed as Form 26QB. It has been specifically introduced for deducting TDS on property purchase.
  2. According to rules in respect of tax deducted at source, buyer of the property would have to deduct the TDS and deposit the same in Government treasury.
  3. Buyer or Purchaser of the property is NOT required to procure Tax Deduction Account Number (TAN). The Buyer is required quote his or her PAN and sellers PAN.
  4. Frequently Asked Question: If amount of property sold is 70 Lakhs, would TDS be calculated at 20 Lakhs or on 70 Lakhs? TDS is to be deducted on the amount paid/credited to the seller. In this case, the deduction will be on total amount i.e. on 70 Lakhs.
  5. TDS would be calculated on the total value and not just the BSP i.e. you have to include EDC/IDC, parking, service tax.

Here is the step-by-step complete process from filling Form 26QB to downloading Form 16B from Traces website.

Navigating to IT website

Go to e-payment page of Income Tax department and click on Form 26QB hyperlink.


Filling the form 26QB

Now before we move ahead, you need to understand this part clearly.

If the property you are purchasing will be in the name of a single buyer and it is sold by a single seller, your life is just made easier. On the form shown below, you would need to fill No for both fields Whether more than one Transferee/Buyer* and Whether more than one Transferor/Seller*

If not, don’t fret. We will make sure the process is smooth for you. Online statement cum Form 26QB is to be filled in by each buyer for unique buyer-seller combination for respective share. For example: 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.

In the process below, we will take the common case of two buyers and one seller hence you would need to fill (2*1) two forms. (You can click below to view enlarged image) Fill in your details as shown in sample below.

TDS Process for property

Once you click on ‘Proceed’ above, you should get ‘Confirm Data Page’ (if you have filled the form without any errors). Go through this page to cross-verify your inputs. Scroll down and click on ‘Confirm’ button.

On the next page, you will get Acknowledgement number. Make a note of this number and save it in a safe location since it would be needed later to download form 16B.

Scroll down, hit ‘Submit to the bank’ and make the payment. Make a note of the Challan number you see on the last screen. This will be needed for Traces registration below.

Downloading Form 16B from Traces

After you get the acknowledgment number above, wait for 4-7 days. Now go to Traces website and register as a new user (if you have not registered yourself earlier) by entering your Validation details and details required under Option 2.

If everything has gone well, you should see the screen below.

Download form 16B from traces

[Go to Downloads > Form 16B (For buyer)] Fill in the required details on the next page and you should be able to download the form 16B within 15-30 minutes.

That’s it. Enjoy!

I use this software to semi-automate the process of filling up forms. This is an inexpensive software which has saved me several hours of time over the past years.

*Some people report that various income tax websites are inaccessible from outside India. In such a case you can make use of a proxy service. Such services can make the web server of a website appear as if you are coming from a particular country (of your choice). (In our case, just select one of the Indian servers when you register and logon to such a service)

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