Section 194IB: TDS on Rent of Property

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Hiral Vakil

TDS
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What is TDS on Rent u/s 194IB?

As per section 194IB of the Income Tax Act, tenant of the property being an individual/ HUF (not liable to tax audit under the income tax act) has to deduct as well as deposit TDS on monthly rent if rent paid exceeds Rs. 50,000 and also the landlord is a resident of India.

What is the rate of TDS u/s 194IB?

TDS is required to be deducted at the rate of 5% from the rent payable to the resident’s landlord. If the PAN of the landlord is not available then TDS should be deducted at the rate of 20%. However, the tenant is not required to obtain TAN for TDS deduction on rental payments.  

This could be understood better using a table as shown below:

Particulars Rate of TDS u/s 194IB
If PAN of the landlord is available 5%
IF PAN of the landlord is not available 20%

TDS Calculator
TDS (Tax Deducted at Source) is a part of Income Tax. TDS should be dedcuted by a person for specific payments made.
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TDS Calculator
TDS (Tax Deducted at Source) is a part of Income Tax. TDS should be dedcuted by a person for specific payments made.
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Who needs to deduct TDS on rent?

Tenant needs to deduct TDS on rent of the property before making payment of rent every month. Let’s take an example to understand better: Suppose, Mr. Ashok is a tenant who pays rent of Rs. 65,000 per month to Mr. Sanjay who is a landlord of the property, then, in that case, Mr. Ashok is responsible to deduct TDS on rent payment made by him.

When to deduct and deposit TDS on rent of property?

What is Form 26QC?
You can click here to know more about it.
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What is Form 26QC?
You can click here to know more about it.
Read More

Let’s take an example:     

Mr. Sudhir entered into a tenancy agreement with Mr. John for FY 2017-18 for the period of 10 months from October 2017 till 31st March 2018 at the monthly rent of Rs. 65,000. The following is the tax deduction amount and date of deposit of TDS:

Particulars At the end of the FY 2017-18
Period of Tenancy 6 months
Total Value of Rent Payable 3,90,000
Value of Rent Paid in Last Month 65,000
Amount Paid/ Credited 3,90,000
TDS 19,500 (3,90,000*5%)
Date of Payment/ Credit 31st March 2018
Date of deduction of TDS 31st March 2018
Due date of deposit of TDS and filing of Form 26QC On or before 30th April 2018

What are the penalties for non-deduction of tax and delay in deposit of tax?

TDS Return for Rent Payments (Form 26QC)
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TDS Return for Rent Payments (Form 26QC)
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FAQs

Who is responsible to deduct the TDS on Rent of Property u/s 194IB?

The tenant of the property being an individual or a HUF (not liable to audit u/s 44AB) would have to deduct the TDS as well as deposit the same in Government treasury. 

What is Form 16C?

Form 16C is the TDS certificate to be issued by the deductor (Tenant of property) to the deductee (Landlord of property) in respect of the tax deducted as well as deposited as TDS on rent under section 194IB of the Income-tax Act, 1961  

Do the tax deductor is required to apply for TAN in order to deduct TDS U/S 194IB?

The tax deductor is not required to apply for TAN in order to deduct TDS U/S 194IB. CBDT has notified form 26QC filling return under this section & this form is PAN based.

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