Form 16b of Income Tax
Form 16b of Income Tax
As per Section 194-IA of the Income Tax Act, 1961, buyers of immovable properties are required to deduct TDS (Tax Deducted at Source) from the payment made to sellers and issue Form 16B as proof of this deduction. This mechanism helps prevent tax evasion and ensures a steady flow of revenue to the government.
Form 16B acts as a vital TDS certificate for property transactions, providing sellers with evidence of the tax paid on their behalf. Additionally, it contains crucial information, including details about the deductee and the nature of the transaction.
If you file taxes regularly, it is essential to understand Form 16B of Income Tax, including its definition, components, how to obtain it and the differences between Form 16, 16A and 16B.
Section 50 C of Income Tax Act
Clubbing Of Income Under Section 64
Section 43B(h) Of Income Tax Act
Form 16B Meaning
Form 16B is a TDS certificate provided by the deductor (buyer) to the deductee (seller) in case of the sale of an immovable property. It contains all the details and information related to the sale of the property.
When a buyer purchases an immovable property (excluding agricultural land), they must make payment to the seller only after deducting a TDS of 1% (under Section 194-IA). For example, if a homebuyer buys a housing property worth ₹2 crores, he must deduct a TDS of ₹2 lakhs while making the payment.
The buyer must also provide Form 16B to the seller so he can avail of tax deduction while filing the return. This form certifies the amount deposited by the buyer on behalf of the seller with the government. It must be noted that Form 16B is not required when a movable property is sold. Unlike Form 16 for salaried employees or Form 16A for non-salary income, Form 16B is associated only with the TDS on the sale of property.
Components of Form 16B
Form 16B contains the following details:
- Name and address of the deductor and deductee
- Assessment year
- PAN number of the deductor and the deductee
- Amount paid or deducted
- Payment acknowledgement number
- Verification
Key Points Related to Form 16B of Income Tax
- It is issued by the buyer when there is a sale/transfer of an immovable property, excluding agricultural land
- The buyer is required to pay the seller a consideration (amount) for such transfer.
- The consideration value or sale value must be more than ₹50 lakhs. If the sale value is less than ₹50 lakhs, TDS is not applicable
- The seller must be a resident of India
- TDS @ 1% must be deducted by the buyer at the time of payment or credit (Section 194-IA)
- TDS @ 20% will be deducted if the seller does not provide PAN (Section 206AA)
Due Date for Issuing Form 16B
Form 16B must be issued by the deductor within 15 days from the due date to furnish a challan in Form 26QB. In the case of non-issuance of Form 16B within the due date, a penalty of ₹100 per day is imposed on the deductor.
Form 26QB is an electronic document or challan for TDS under 194-IA and is needed to obtain Form 16B. Once the challan is printed and the tax amount is deposited, the challan counterfoil with all the details, such as CIN, bank details, payment details, etc., is displayed. The counterfoil is proof of TDS payment by the deductor. Form 26QB must be issued within 30 days after the end of the month in which the payment was made.
For example, suppose a buyer purchased a ready-to-move-in housing property worth ₹2 crore in April 2018 and completed the payment in May 2018. It means that the due date for generating Form 26QB is 30th June 2018. Considering that the Form 26QB was generated on June 25th, the due date for issuing Form 16B becomes July 10th, 2018.
How to Download Form 16B?
Taxpayers can download their Form 16B from the TRACES portal five days after its issuance.
Below are the steps for the 16B Form download:
- Go to the TRACES website and register yourself if you are a new user
- After registering, you can log in to the portal with your user ID and password
- Under the downloads tab, select Form 16B
- Provide details such as Form 26QB number, PAN of the seller, assessment year, etc
- Confirm your details that are automatically filled in TRACES. Click on Submit
- After you click submit, a request number will be generated
- You can download the Form 16B from the requested download section on the portal
- Enter the request number and click “View Request.”
- If the status shows “Available”, you can download the form immediately. If the status reflects as “Submitted”, you must wait for 24-48 hours
- Download the form using the download button on the page
- The downloaded form will be in a zip format. The default password to open Form 16B is your date of birth
Difference Between Form 16, Form 16A and Form 16B
| Particulars | Form 16 | Form 16A | Form 16B |
|---|---|---|---|
| What is it? | It is a TDS certificate given to the salaried employees by the employer | It is a TDS certificate issued by tenants, financial institutions, etc., for non-salaried payments | Form 16B is a TDS certificate issued when an immovable property is bought or sold. |
| What does it contain? | It contains the employee’s salary details, tax deducted, etc. | It includes information such as the deductor’s name, PAN, TAN, deductee’s name, PAN and TAN, TDS, etc. | It contains information such as the buyer’s name, address, assessment year, acknowledgement number for Form 26QB, the seller’s name, address, TDS amount, and other relevant details. |
| Who is it for? | For salaried employees | For non-salaried employees | For property sellers |
Conclusion
Form 16B is a crucial component when it comes to buying and selling properties. It contains all the details of the tax deducted on behalf of the seller by the buyer when dealing with an immovable property.
The tax deposited by the buyer is reflected in Form 16, which can be used by the seller as proof to the government. It is an essential document that an assessee can furnish when filing the return, thereby reducing their tax liability.
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Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
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