TDS on Rent by Certain Individuals and HUFs-Section 194IB

Section 194IB : TDS on Rent by Certain Individuals and HUFs

  • TDS to be deducted @ 5% if Rental payment to  a resident exceeds Rs. 50000 per month
  • No threshold : TDS applicable on full amount
  • TDS to be deducted by Individuals or HUF to whom section 194I is not applicable. (Turnover or Prof services less than 1 Cr or 50 Lacs respectively)
  • Time of Deduction : At the time of Credit or payment of last rent of the year (If tenancy terminates during the year, during such last month of tenancy)
  • If PAN is not furnished, maximum TDS will be Rent of Last month
  • The Buyer need not apply for TAN to deposit this TDS
  • He has to deposit using his PAN
  • A separate form 26QC has to be filed. It is a return cum challan. Once 26QC form is filed by the tenant, the owner gets the credit of the Tax which reflects in his 26AS
  • The Tenant needs to create a Tax payer login on Traces site and issue a Form 16C to the Owner.

Section 194-IB of the Income Tax Act:- Payment of rent by certain individuals or Hindu undivided family

(1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.

(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

Explanation.—For the purposes of this section, “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.