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TDS-on-Rent-under-Section-194-IB

 

TDS on Rent under Section 194-IB

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Introduction-

TDS on Rent under Section 194-IB:- Any person, being an individual or a Hindu undivided family (other than those referred under section 194-I), responsible for paying to a resident any income by way of rent exceeding Rs. 50,000 for a month or part of a month during the previous year, shall deduct an amount equal to 5% of such income as income-tax thereon w.e.f. 01.06.2017.

   
‘Rent’ according to section 194-IB means that any payment under any tenancy, lease, sub-lease or any other arrangement for below mentioned uses:-
  • Building including factory building
  • Land
  • Land appurtenant to a structure including factory building
  • Machinery
  • Plant
  • Furniture
  • Equipment
  • Fittings
   
Applicability-
  • It is for commercial and residential purposes
  • TDS should be deducted @ 5% on rent amount exceeding Rs. 50,000/- monthly
  • TDS is to be deducted once in the financial year, whether at the end of the year or in the month when the premise is vacated / on termination of the agreement.
  • If the property is vacated during the year, the TDS needs to be deducted on the last day of the tenancy.
  • Tenants do not need to apply for TAN. CBDT has notified form 26QC for filling return under section 194-IBd and this is PAN based.
  • The certificate of deduction of TDS is Form 16C & it has to be submitted to the payee within 15 days from the due date for furnishing the challan-cum-statement in form 26QC.
  • If the Landlord / Lessor/ Payee is a non-resident, liability to deduct TDS arises under section 195 of the Income-tax Act, 1961.
 
See the related post : How to E-file Income Tax Return
 
Due date for payment of TDS on rent

The due date for payment of TDS on rent is 30 days from the end of the month in which the rent is paid.           

 
Example: If the TDS has been deducted from rent under section 194-IB in the month of August 2018, the due date is 30.09.2018. i.e. 30 days from the end of the month.
   
Penalties for Non-compliance
  • Interest @ 1% per month will be levied if TDS is not deducted & 1.5% per month will be levied if TDS is deducted but not paid.
  • The penalty of Rs. 100 per day will be levied if return is filed after due date. The total penalty amount shall not exceed amount of TDS.

 

 
Keep in mind the following points-
  • TDS will be deducted @ 20% if the PAN number is not provided by landlord.
  • TDS on rent does not charge any Secondary and Higher Education Cess or Education Cess.
  • There is no surcharge levied on TDS on rent except where a foreign company is involved and the payment is above Rs.1 crore.
  • TDS not to be deducted on refundable security amount, it will be charged to TDS, if the security is non-refundable or adjusted with the rent amount in future.
  • If the tenant pays ground rent, municipal taxes, etc., there is no TDS charged on those amounts.

 




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