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TDS on Rent – Section 194IB w.e.f 1st June 2017

Persons required to deduct TDS under Section 194IB

  1. Individual and HUF who are not required to get his accounts audited under section 44AB.
  2. Individual and HUF who are required to get his accounts audited under Points (c), (d) or (e) of section 44AB.

In other words  only individuals and huf who are required to get his accounts audited due to turnover or gross receipts higher than specified limits are not covered under this section, all other individuals are covered in this section.

Individuals and HUF not covered under this section (as mentioned above), company, partnership firm, AOP and  BOI are required to deducted TDS from rent under section 194I.

Payment Covered

Payment of rent to a resident for land or building exceeding Rs. 50,000 per month is liable for tax deduction. Payment of rent paid or payable after 1st June 2017 are covered  only.

TDS Rate

TDS is deductible at the rate of 5% of the rent paid or payable. If the person receiving rent doesn’t furnish his PAN then TDS is deductible at the rate of 20% subject to maximum limit of amount of rent payable for the month of march or last month of tenancy as the case may be.

Time of Deduction

TDS is to be deducted only one time in a year and not in every month. TDS is to be deducted at earlier from the following

  1. Time of credit of rent to the account of payee for the month of march or the last month of tenancy, if property is vacated during the year as the case may be.
  2. Time of payment of rent to payee for the month of march or the last month of tenancy , if property is vacated during the year as the case may be.

TAN no. Not required

TAN number is not required by such person to deduct and deposit TDS.

 

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