TDS refund on cancellation of agreement of sale

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Quick Summary

If you've cancelled a registered agreement for an immovable property and already paid 1% TDS via Form 26QB, but TRACES shows the challan as 'FULLY CONSUMED', you'll need to request a correction on the TRACES portal. This involves revising your Form 26QB to reflect the cancellation, potentially requiring a cancellation deed and approval from the builder. In some cases, you may need to involve the Assessing Officer (AO) with proof of cancellation and TDS payment. Once the correction is processed and the amount is shown as unconsumed, you can then apply for your refund through TRACES.

Harshil Shah

Harshil Shah (Querist)

10 April 2025 I have cancelled the registered agreement for immovable property and have already filed 1% TDS to Builder PAN using FORM 26QB. Now if I try to claim refund through TRACES on checking the challan consumption it shows FULLY CONSUMED. Can you please suggest how can I claim refund in this scenario.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

11 April 2025 Go to the TRACES website (www.tdscpc.gov.in) and register using your PAN.

Request for Correction:

Log in to your TRACES account using your buyer's PAN as the User ID.
Navigate to the "Statement/Forms" tab.
Click on "Request for Correction."
Select "Statement 26QB" for the correction.
Choose the relevant Financial Year and Quarter.
For the "Reason for Correction," select an appropriate option like "Cancellation of Transaction" or "Excess TDS Paid due to Cancellation."
File the Correction: You'll likely need to revise the Form 26QB details to reflect the cancellation. This might involve:

Indicating that the transaction did not go through.
Potentially providing details of the cancellation (like a cancellation deed, if executed).
Submit the Correction Request: Once you've made the necessary corrections, submit the request. You might need to use your Digital Signature Certificate (DSC) for this process.

Inform the Seller (Builder): The correction request might require the seller (Builder's PAN) to approve the changes on TRACES. Ensure they are aware of your correction request and are ready to approve it.

Liaise with the Assessing Officer (AO): In some cases, especially when a transaction is cancelled, the AO might need to be involved. Be prepared to provide them with:

Proof of the cancelled agreement (Cancellation Deed, if any).
Proof of TDS payment (Form 26QB acknowledgement).
A letter explaining the situation and the reason for the refund claim.
Potentially, you might need to visit the AO's office along with the seller.
Track the Correction and Refund Status: After submitting the correction request, you can track its status on the TRACES portal under the "Track Correction Request" option. Once the correction is approved by the AO (if required), you should be able to see the unconsumed amount available for refund. You can then initiate the refund request.

Apply for Refund (Form 26B): Once the correction is processed and shows an unconsumed amount, you can typically apply for a refund through TRACES by navigating to the "Refund" section and following the instructions. You'll need to provide your bank account details for the refund to be credited.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 September 2025 Good luck..

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