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Received notice from the income tax department for non-filing of Form 26QB (TDS on property)

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Taxpayers are receiving notice from Income tax department for non filing of Form 26QB which is for TDS deducted when buying property.

The income tax department has received Annual Information Return (AIR) submitted by registrar/sub-registrar, that you have done a property transaction exceeding Rs 50lakhs.

Buyers of property must deduct TDS from payment made to seller, if the sale price exceeds Rs 50lakhs. TDS has to be deducted @1% at the time of making payment to the seller. (as per section 194IA of the income tax act) – Read my previous post onTDS deduction on Property purchase

TDS which is deducted has to be deposited within 7 days from the end of the month in which deduction is made. Form 26QB must be submitted. Read my other post on How to file or pay TDS on property (FOrm 26QB or 16B)

In case of Non filing or Late filing of TDS Statements, following are the implications:

Penalty u/s 201 : 1% interest for the delay of every month due to late deduction of TDS from the date it was deductible to the date TDS is actually deducted.
1.5% penalty for every month for late payment of TDS deducted to Govt. from the date TDS was deducted till the actual date of payment.
Note: Interest calculated will be simple interest. The fraction/part of the month is considered as full month.

Penalty under section 234E @ Rs 200 per day :  In case of default of non-filing or late filing of Form 26QB, a penal fee is applicable under section 234E of the income tax act. Rs. 200 has to be paid for every day during which such failure continues. The buyer would also be liable for defaults of Late Deduction, Late Payment and Interest thereon.

Penalty under section 271H :   Assessing Officer may levy penalty under section 271H at his discretion. This section is applicable when a statement as required by the tax laws is not submitted timely. Penalty under this section must be more than Rs 10,000 and can extend to Rs 1lakh. However, if TDS is deposited with fee & interest and statement is submitted within 1 year of the time prescribed, no penalty shall be levied.

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Sample Notice received by taxpayers

Sub: CPC (TDS) Follow up: 26QB Statement not yet filed for Purchase of Property during FY 2013-

14

Date of communication : 01/04/2016

Dear Buyer of Immovable Property, PAN(XXXXX1234X),

As per the information received in Annual Information return (AIR) through Registrar/Sub-registrar, you have executed transaction for Purchase of Immovable Property exceeding Rs. 50 Lakhs (Rupees Fifty Lakhs) during Financial Year 2013-14. However TDS Statement in Form 26QB has not yet been filed by you. In this regard, your urgent attention is invited to the following, with respect to filing of TDS Statement in Form 26QB and Issuance of TDS Certificates in Form 16B downloaded from TRACES. 

  1. Mandatory Filing of Form 26QB: 
    As per Finance Act of 2013, TDS is applicable on transfer of immovable property, wherein the consideration of the property exceeds or is equal to Rs 50 Lakhs. Sec 194 IA of the Income Tax Act, 1961 read with Rule 30, 31 & 31A of Income Tax Rules states that:
  2. For all such transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration.
  3. Tax so deducted should be deposited to the Government Account through e-tax Payment option (Netbanking) or any of the authorised bank branches. Any sum so deducted under section 194-IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made.
  4. PAN of seller as well as Purchaser should be mandatorily furnished in an online Form (Form 26QB) for furnishing information regarding the property transaction. Facility for furnishing information regarding the transaction of sale of immoveable property and payment of TDS thereof is available on the website www.tin-nsdl.com(https://www.tin-nsdl.com/) .
  5. TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account. Form 16B will be available for download by Registering on the website of Centralized Processing Cell (TDS) www.tdscpc.gov.in(https://www.tdscpc.gov.in/) . 
  1. Issuance of TDS Certificates in Form 16B downloaded from TRACES:

* It is mandatory for all buyers to issue TDS certificates after generating and downloading the same from TRACES,”TDS Reconciliation Analysis and Correction Enabling System”(www.tdscpc.gov.in (https://www.tdscpc.gov.in/) ). The TDS Certificates downloaded only from TRACES Portal will hold valid.

Implications of Non/Late filing of TDS Statements:

 * For Buyer of Property: In case of default on account of Non / late filing of Form 26QB, a fee shall be levied u/s 234E of the Act. He shall be liable to pay, by way of fee, a sum of Rs. 200 (two hundred) for every day during which such failure continues. The buyer would also be liable for defaults of Late Deduction, Late Payment and Interest thereon. Penalty under S. 271H may also be levied on him by the Assessing Officer.

 * For Seller of Property: Non/ Late filing of Form 26QB results into the TDS Credit not being available to the seller for claiming the amount of tax already deducted from the payments made.

 In case of any clarification/suggestion, you may write to us on (info@tdscpc.gov.in). Please click the links for any assistance on Filing 26QB (https://www.tin-nsdl.com/tds/TDS-Introduction.php) , Downloading Form 16B (https://contents.tdscpc.gov.in/en/faq-taxpayer-functionality1.html) or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM 

Notes:

* Please quote correct PAN for the deductee rows in the TDS Statements. 
* Please refer to our FAQs (https://www.tdscpc.gov.in/en/top-faq.html) and e-tutorials (https://www.tdscpc.gov.in/en/user-manual.html) for detailed screen-driven assistance, before seeking further help.

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If you have received such notice, please comment below.

Also Read:   Further Extension - Income Tax Return Filing Deadline for FY 2020-21 (AY 2021-22)
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