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TDS on Rent by Individual/HUF – Section 194IB

Provisions of this section is applicable from 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.

Even salaried person or person who doesn’t have any income are covered under section 194IB.

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 landlord 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.

Payment made under sub lease is also covered.

If payment is made to non resident then TDS is deductible under section 195.

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 number Not required

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

Due Date of Payment

Payment is to be made by challan cum statement as mentioned below within 30 days from the end of month in which deduction is made. For example if deduction is made in month of March then payment is to be made till 30th of April.

As deduction is only required once in a year, payment is also required once in a year. But if an individual leaves one house and then go to another house and rent of both houses is more than Rs. 50,000 then payment is to be made twice in a year.

How to Fill Challan cum Statment in Form 26QC

Rule 31A of Income tax rules states that a challan cum statement in form 26QC is to be filed within 30 days from the end of month in which deduction under this section is made.

Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and then Go to Form 26QC. The form will be opened. Please take care that this page also expires if remains inactive for some time.

Details required to fill form 26QC

  • PAN of landlord and tenant’s PAN
  • Address of both landlord and tenant
  • Address of let out Property
  • Period of Tenancy
  • Amount of rent payable
  • Rent payable in last month
  • Total amount paid credited
  • Interest or late fees payable
  • Date of tax deduction

Payment can be made using net banking at time of filing form 26QC or can be made afterwards by going to this link and entering pan of yourself and pan of landlord. Authorized bank branches.

TDS Certificate in Form 16C

TDS certificate is to be given by the tenant to landlord in Form 16C which is generated from the TRACES website. Such certificate is to be given to tenant within 15 days from the due date of submitting Form 26QC, so normally such date will be 45 days from the end of month in which deduction is made. If due date of form 26QC is extended than 15 days from such extended date.

The landlord can verify details of taxes deducted by tenant in his form 26AS.

Late Payment – Interest and Penalty

Interest at the rate of 1.5% per month is payable if TDS is deducted but not paid to government. You can read more details and calculation here – Taxadda guide to Interest on late payment of TDS

Also a penalty of Rs. 200 per day is levied for late filing of form 26QC. The maximum amount of penalty is the the amount of TDS to be deducted.

Difference Between Section 194I and Section 194IB

Basis Section 194I Section 194IB
Applicability – Every person paying rent (except individual & HUF)
– Individual & HUF if doing business and covered in tax audit (Turnover exceeds Rs. 1 Crore for Business & 25 lakh for Profession) in last year immediately preceding the financial year in which income by way of rent is credited or paid.
Every Individual & HUF not covered in 194-I
Applicable Limit Rs. 1,80,000 Per annum Rs. 50,000 per month or part of the month during financial year
TDS Rate 10% 5%
TAN requirement TAN is required TAN is not required. PAN is required.
Payment and Return Monthly Payment and Quarterly Return Payment and Return once in a year.

Sourc: TIN-NSDL,   Notification no. 48/2017

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