Under the Income Tax Act, 1961, salaried individuals are taxed as per applicable slabs and are required to file tax returns before a designated date each year. Form 16 is one of the certificates issued by employers that contain information pertaining to what is required by salaried individuals to file their income tax returns.

Taxpayers often confuse between Form 16A and Form 16B while filing their returns. It must be understood that despite being included under the same certificate, each form is used for distinct purposes. Taxpayers must find out about their specific purposes to streamline the tax filing process to a great extent. 

What is Form 16B?

Typically, Form 16B is a TDS certificate that is issued by a purchaser, i.e. a deductor to a seller. It helps taxpayers to verify the total amount of tax deducted at source while purchasing a property. The said tax amount is deposited with the Income Tax by the deductor. In simple words, Form 16B is a certificate that details the total TDS deducted in case of a property sale. 

Notably, TDS on the immovable property comes under the provision of Section 194-IA of the ITA. Nonetheless, TDS is not applicable to agricultural and immovable properties whose sale value is less than Rs.50 lakh. 

Under Section 194 of the ITA, buyers must deduct a TDS at the rate of 1% while receiving payment. Once the tax amount is deposited with the IT Department, the buyer is required to issue Form 16B income tax to the seller in question. 

Unlike Form 16, which is a TDS certificate for salary and Form 16A that is a TDS certificate for non-salary income, this form verifies the TDS applicable on the sale proceeds of the property. 

Components of Form 16B

The prominent parts of form 16B include –

  • Seller’s PAN
  • Assessment year
  • Payment acknowledgement number
  • Break up of salary paid
  • Deduction under ITA
  • Reliefs under section 89

These details come in handy while filing taxes and ITR. Individuals can refer to these details and proceed with the formalities quickly. 

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When is the Due Date for Issuing Form 16?

Form 16B TDS is mandatory in India, and its non-issuance leads to a penalty. A penalty of Rs.100/day is incurred for the same. It must be noted, the deductor has to furnish this form to the concerned payee within 15 days calculated from the due date to furnish challan-cum statement in Form 26QB. 

How is Form 16B Generated?

Like discussed, at the time of purchasing a property, the buyer deducts TDS at 10%. The amount thus deducted is deposited in an authorised financial institution with Form 26QB. 

  • Generation of Form 26QB

One can easily generate this form on the website of TIN-NSDL by following these steps –

Step 1 – Visit the TIN NSDL website.

Step 2- Navigate to ‘TDS on sale of the property’.

Step 3 – Click on the online form for furnishing ‘TDS on property’ option.

Step 4 – Select ‘TDS on sale of a property.’

Step 5 – Enter details like PAN and contact details of both buyer and seller, property details, the amount paid and tax deposited, etc.

Step 6 – Verify the details and submit the form.

Individuals also have the option to print the form or submit it to the banking institution. 

  • Depositing TDS amount

Once the challan is printed, the tax amount is deposited as a demand draft or a cheque. Alternatively, if the taxpayer opts to pay at a bank option, he/she is redirected to the bank’s official payment page. 

Once the due amount is paid successfully, a challan counterfoil with payment details, CIN, bank’s name, etc. is displayed. Notably, this counterfoil serves as proof of payment. Following this, taxpayers who are registered proceed to the portal of TRACES after 5 days and download the Form 16B.

  • Downloading Form 16B

These necessary steps must be followed to download the form –

  • Login into the portal by providing username and password.
  • Navigate to ‘Downloads’ and click on Form 16B.
  • Provide details like – Seller’s PAN, assessment year, acknowledgement no. of form 26QB.

Once these steps are followed, the option Form 16B download is available for use. 

Difference Between Form 16, Form 16A and Form 16B

The most noteworthy differences are given in this table format – 

Parameters  Form 16 Form 16A Form 16B 
Who issues it? It is issued by the employer. It is issued by financial institutions, tenants, etc. It is issued by property buyers to concerned sellers.
Who is it directed at? It is directed towards salaried employees.  It is directed towards non-salaried employees. It is directed towards property sellers. 
What is the purpose of it? Form 16 issued for TDS on salary. Form 16A is issued on income generated through non-salary sources such as rent, returns on investment, securities or interest on FD.  Form 16B is issued for TDS on earnings generated through the sale of any immovable property.
What are the components of it? This form’s components include –

  • Proof of income;
  • Employer’s PAN and TAN;

Employee’s PAN;

  • Tax paid on behalf of employees; 
  • Payment acknowledgement no.;
  • Surcharges and education cess.
This form’s components include –

  • Deductor’s PAN and TAN;
  • Deductee’s PAN;
  • Amount of Tax paid;
  • The receipt number of TDS paid.  
This form’s elements include –

  • Seller’s PAN;
  • Assessment year;
  • Acknowledgement number of Form 26QB;
  • Salary breakup;
  • Deductions under ITA, reliefs under Section 89. 
It is bound by which law? Section 203 of Income Tax Act. Section 203 of Income Tax Act.  Section 194 of Income Tax Act.

To avoid discrepancy when it comes to filing taxes, taxpayers must find out details about Form 16B and other forms and use them accordingly. This will not only eliminate the scope of making errors but will also prevent from attracting any penalty. In turn, the certificate availed will help them to file Income Tax Returns and use it as proof of income as and when required.