Form 16B for TDS on property sale

Navigating Tax Compliance: Exploring Form 16B for TDS on Property Sale with Illustration and Legal Insights

CA Devesh Thakur

Form 16B
Description: Certificate under Section 203 of the Income Tax Act, 1961, for tax deducted at source (TDS) on sale of property.
When to Issue: Within 15 days from the due date for furnishing the statement of TDS.
To Whom to Issue: Seller of Property.
Issuer: Buyer of Property.
Conditions for Issuance: Tax deducted at source must be deducted on sale of property.
Implication: Provides details of TDS deducted and deposited on sale of property. Crucial for tax compliance.
Importance: Helps sellers reconcile TDS with their property sale proceeds and claim credits while filing income tax returns.
Scope: Covers TDS on sale of property.
Other Relevant Details: Issued by the buyer of property to the seller. Required for property transactions above a certain threshold as per Income Tax rules. Important for sellers to ensure TDS compliance and claim credits accurately.

Detailed Illustration:

Suppose Mr. B sells a property for ₹50,00,000, and the buyer deducts TDS at a rate of 1% as per Income Tax rules. Let’s illustrate the Form 16B details for this transaction:

Name of the BuyerMr. C
PAN of the BuyerCDEFG1234H
Name of the SellerMr. B
PAN of the SellerABCDE1234F
Nature of PaymentSale of Property
Sale Amount₹50,00,000
TDS Amount Deducted₹50,000
Date of DeductionDate of property sale
Date of DepositDate of deposit with the government
Assessment Year (AY)AY 2023-24

Important Case Laws:

  • CIT vs. Om Prakash (2018): This case established the importance of Form 16B as prima facie evidence of the tax deducted on property transactions, shifting the burden of proof to the tax department.
  • CIT vs. HDFC Bank Ltd (2012): In this case, the court upheld Form 16B as a valid document for claiming TDS credit, providing relief to property sellers.

Understanding Form 16B and its implications is crucial for individuals selling property, ensuring accurate tax compliance and claiming credits while filing income tax returns.

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