Form 16B – TDS Certificate for Property Sale

When buying an immovable property in India worth more than ₹50 lakhs, the buyer is legally required to deduct 1% TDS from the total sale value. The buyer must then deposit this amount with the Income Tax Department and issue Form 16B as a certificate to the seller.

This document is crucial for ensuring tax compliance and avoiding penalties during high-value property transactions.

What is Form 16B?

Form 16B is a TDS certificate issued by the buyer of a property to the seller, confirming that the buyer has:

• Deducted 1% tax at source (TDS) from the sale price

• Deposited the TDS amount with the Income Tax Department

• Submitted the relevant details under Section 194-IA of the Income Tax Act

It applies only to transactions involving immovable property like flats, plots, apartments, or buildings — not agricultural land — where the transaction value exceeds ₹50 lakhs.

This form is unrelated to salary-based Form 16, which is issued by employers to employees.

When is Form 16B Required?

You are required to issue Form 16B when:

• You purchase immovable property (excluding agricultural land).
• The property value exceeds ₹50 lakhs.
• You are the buyer of the property and are making the payment to the seller.
• You have deducted 1% TDS from the payment and deposited it via Form 26QB.

Example
If you purchase a flat for ₹70,00,000, you must deduct ₹70,000 (1%) as TDS before paying the seller. After depositing this TDS with the Income Tax Department, you can download Form 16B and give it to the seller as proof.

What Details are Mentioned in Form 16B?

Form 16B contains:

• Name and PAN of buyer and seller
• Complete details of the property transaction
• Date of payment and amount paid
• TDS amount deducted and deposited
• Challan and acknowledgement number of TDS payment (from Form 26QB)

This certificate acts as a record of tax compliance for both parties.

Why is Form 16B Important?

It serves as proof that the buyer has deducted and deposited TDS

Helps the seller claim credit of TDS while filing ITR

Ensures compliance with the Income Tax Act

Mandatory for transactions over ₹50 lakhs

Failing to deduct or deposit TDS can attract interest and penalties from the Income Tax Department, so Form 16B is crucial for both parties.

Eligibility for Form 16B

Form 16B is issued to individuals who sell immovable property (excluding agricultural land) under certain conditions. You are eligible for Form 16B if:

• The property buyer is a resident Indian.
• The sale amount is ₹50 lakh or more.

In such cases, it is mandatory for the buyer to deduct 1% TDS on the total sale value either at the time of making the payment or when the amount is credited. Once the deduction is made, the buyer must file Form 26QB and then issue Form 16B to you as proof of the TDS paid on your behalf.