TDS on payment of Rent by Individual/HUF in Excess of Rs. 50,000 per month

• This section is applicable w.e.f 01/06/2017.

• Any individual/HUF whose books of account are not required to be audited u/s 44AB of Income Tax Act, 1961 in the immediate preceding F.Y. and paying to a resident, rent of land and building, is liable to deduct tax u/s 194-IB. However, no tax is required to be deducted on payment of monthly rent of Rs. 50,000 or less.

• Tax shall be deducted only one time in a year i.e. annually in the last month of the previous year.

• If the tenant is vacating the premises during the previous year, tax need to be deducted when the tenant vacates the premises.

• Rate of TDS shall be 5% on the entire rent.

• This section is not applicable to the individual/HUF who are liable to deduct tax u/s 194-I.

• Payer (Tenant) can be both resident and non-resident. Both are liable to deduct tax.

• What is important is the residential status of payee. TDS will be deducted only if payment is made to RESIDENT.

• Deductor is not liable to obtain TAN for the purpose of depositing tax. Alike section 194-IA, he can comply to this section with his PAN only.  

• If PAN is not available, tax shall be deducted @ 20%. However, amount of tax shall not be more than amount of last month’s rent.

• Tax deducted shall be deposited within 30 days from the end of the month in which deduction is made in form 26QC.

 
 
Prepared and compiled by
 
Anil Mehta
Kotwani Anil Kumar & Associates (KAKA)
Chartered Accountants
A-73, Lajpat Nagar-2,
New Delhi-110024