26QB Vs. 27Q: Wrong TDS Form by Buyer Can’t Deny NRI’s Tax Credit
In a recent case of Parag Keshav Bopardikar v/s ITO & Ors.[TS-727-HC-2025-DEL], the Delhi High Court ruled in favour of an NRI who sold his property in India and faced a tax issue. Although the buyer had correctly deducted tax (TDS) of Rs. 18.68 lakhs from the sale proceeds and deposited it with the Government, he mistakenly used the wrong TDS form meant for resident sellers (Form 26QB instead of Form 27Q for NRIs). Because of this form mismatch, the Income Tax Department’s system did not reflect the TDS in the seller’s account, and a huge tax demand was raised. The department even started penalty proceedings, assuming the tax was not paid.
The Court found this unfair. It said that just because the buyer used the wrong form, the seller (NRI) should not suffer especially when the tax had already been deducted and paid. The judges criticized the tax officer for issuing a fresh demand without proper legal grounds and called it a clear case of non-application of mind.
The Court ordered the tax department to correct its records, give proper credit of TDS to the NRI seller, and refund any excess tax collected. This case highlights that form mistakes by buyers should not lead to harassment of genuine taxpayers.
The copy of the order is as under:
