Treatment of TDS under Section 194-IA in case of cancelled property transaction

This query is : Resolved

Suresh S. Tejwani (Querist)
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17 March 2026 In case of the buyer deducted TDS on the sale consideration and deposited the same .Subsequently, the transaction was cancelled, and the consideration amount was refunded to the buyer by the seller.
1.Whether the TDS deposited under Section 194-IA can be claimed as a refund in such circumstances.
2.Whether the refund should be claimed by the deductor (buyer) or the deductee (seller).
3.The appropriate procedure to claim such refund, including any rectification or correction in Form 26QB.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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18 March 2026 For a cancelled property transaction, the TDS deposited under Section 194-IA can be fully refunded. The buyer can claim this refund directly through the TRACES portal by submitting a "Request for Refund" and providing the cancellation deed and a No Objection Certificate (NOC) from the seller to the Jurisdictional Assessing Officer. Alternatively, if the seller is cooperative, the easiest practical method is for the seller to claim the TDS as a refund while filing their Income Tax Return (ITR) and subsequently reimburse the buyer.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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18 March 2026 In this situation, how should I report this in Income Tax Return?
Can I still claim the TDS credit even though the income from the property sale was not received due to cancellation of the deal?

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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18 March 2026 How can a buyer claim a TDS refund directly through the TRACES portal? Please explain the complete process step by step.

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