Form 16B – TDS Certificate for Sale of Property

Last Updated at: Sep 07, 2020
Form 16B – TDS Certificate for Sale of Property
Every person who has income chargeable to tax is required to file an income tax return to report their income and tax liabilities. However, income tax laws in India provide for collection/deduction of tax at source (TDS/TCS) itself.


For such tax deduction, obtaining a Tax deduction Account Number (TAN) is mandatory. Form 16B is one of the TDS certificates to be issued by the deductor under Income-tax Act, 1961 to the deductee in respect of TDS deposited to Government.


As per a recent amendment in Form 26QB by CBDT, both the seller and the buyer can now quote either PAN or Aadhaar while they file TDS return in Form 16 B.


Every Indian citizen who falls under a particular tax bracket due to his or her earnings is liable to file Income tax returns annually. However, to make things simpler for employers and employees, the Government has drafted IT laws that allow for a tax deduction or collection at the source. This practice is popularly known as TDS or TCS. Being able to deduct tax at the source ensures the Government a steady source of income, and also helps in curbing tax evasion. To be eligible for TDS, every employee requires a Tax Deduction or Collection Account Number, known as TAN. The company or deductor is given the responsibility of filing the TDS returns and providing employees with a certificate showing they have paid the required tax. Form 16B is one such TDS certificate that is handed out. Here’s a look at everything you need to know about Form 16B.

File Your Income Tax Returns

Role of Form 16B

Form 16B is a TDS certificate which the deductor issues as per laws provided in the Income-tax Act, 1961 with respect to sale or transfer of immovable property or asset. It is issued for all kinds of immovable property including commercial and residential buildings, land and even a part of a building. The only type of land this Form does not comply with is agricultural land whose sale has stringent rules. The person who buys the property is liable to handle the cost of the transfer. This Form comes into play in transactions that exceed Rs 50 lakhs, and the TDS is deducted at a 1% rate on the payment. However, if the seller does not have the required documents such as PAN, statement records and TAN, then TDS will be cut at a rate of 20%.

Why we Need Form 26QB and Form 16B

Form 26QB functions as a return-cum-challan for TDS payments and may be filed online as per Section 194-IA. It must be filed within thirty days of the completion of the transaction and is required in instalments if the transaction was completed in instalments. Basically, each TDS deduction requires a Form 26QB. It is also required for every buyer-seller combination which is a part of the deal. It is important to note that to file TDS returns, TAN is mandatory and is paid via ITNS 281. However, in the transfer of immovable property, as ITNS 281 is invalid, one would require TAN, which is not feasible if there is only one transaction to be done. Hence, the government has taken the help of the return-cum Challan Form 26QB.

Before 7 days after TDS deduction, the credit has to mentioned using Form 26AS of seller. At least within fifteen days of submitting Form 26QB, the deductor must file Form 16B. Once generated, it may be downloaded from the TRACES website and kept for later use.

Downloading Form 16B from TRACES

  1. Register as a payee on TRACES using this link. This will require details such as personal information, PAN card details, challan number details and details of Form 26QB. Once you enter the verification number and click Proceed, an email will be sent to the registered ID, which you can use to create the account.
  2. Once you are registered, log in to your profile using the username and password which you have set.
  3. Go to Downloads>> ‘Form 16B (For Buyer)’
  4. Provide the details they ask for like assessment year and PAN details of the seller
  5. If the data provided is right, Form 16B will be generated and available on the downloads section.
  6. Print or Save Form 16B as per your requirement,

Other Form 16s

Form 16B is a kind of verification that the buyer has paid the required tax and is controlled by Section  194-IA of the Income Tax Act, 1961. There are several certificates of this nature but for different purposes. While Form 16B handles immovable properties, Form 16 works for salary deduction and Form 16A is for all other payments.

Things to Keep in Mind

  • Deducting the right TDS amount is the responsibility of the payer in most cases.
  • The tax must be deposited at least a week from the end of the month in which the transaction took place to avoid charges and dues. The deposit must be through a challan statement, or by using RBI or SBI deposit facilities.
  • To make a legal sale of immovable property, the PAN details of both the seller and buyer must be furnished.
  • You can also print Form 26QB, and pay TDS via cheque or demand draft.
  • If the buyer selects, Submit to Bank, then he or she may through internet banking facilities of the concerned bank.
  • Average time for the Form to be available for download is five days.
A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.