As per the section 194I and 194IB of Income-tax act, TDS on Rent is required to be deducted from the total rent paid or payable during the year. If the total rent paid in a Financial year is over Rs.2,40,000 per annum is liable to pay TDS, in recent budget, 2019-20 amendments TDS on Rent is liable to be deducted by any person as per the section 194I, not being an individual or HUFs (Hindu Undivided Family). In another case, an Individual or HUF is paying rent of Rs. 50,000 or more per month required to deduct TDS @ 5% of rental amount under section 194IB.
TDS on Rent under Section 194I
- TDS is required to be deducted at the time of payment of rent to the owner and pay it to the government through a recognized bank.
- A Business/Professionals liable to Tax audit under section 44AB and paying rent exceeds Rs. 2,40,000 per annum required to be deducted @10% TDS under section 194I of the total rent paid or payable during the financial year.
- In some cases, there are 2 co-owners of the property, this limit would apply for each co-owner i.e. TDS on Rent is liable to be deducted if payment to each co-owner exceeds Rs. 2,40,000 p.a.
TDS on Rent under section 194IB
- An Individual/HUF/Business/Professionals not liable to Tax audit under section 44AB and paying rent of Rs. 50,000 or more per month required to be deducted @5% TDS under section 194IB of the total rent paid or payable.
- The total TDS amount required to be deducted in the “last month of the financial year only” for the whole year. Deducted TDS should be deposited to the Government Account through any of the authorized bank branches using “TDS Challan”
- In case of Tenant vacates the rented property during the year itself – then in such cases TDS @ 5% is required to be deducted in the “last month of tenancy”.
Collect the PAN of the Property owner/Landlord, as well as tenant should be mandatorily furnished in the TDS online Form for furnishing information regarding the rent.
Do not commit any error in quoting the PAN or other details in the online form. For the purpose of error rectification, you have to contact Income Tax Department.
Download and furnish TDS certificate in Form 16C from TRACES and issue to the Landlord/ Lessor/Payee within 15 days from the due date of furnishing of 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.
Tax Rates of TDS on Rent
TDS on Rent has to be deducted at the time of paying of rent to the payee account by the issue of cheque/draft/cash or any other payment mode. The rates of TDS on rent as follows:
|Type of Property||TDS Rates||Deduction|
|Rent for Machinery/Equipment/Plat||2% on the rent amount paid||TDS to be deducted and deposited monthly|
|Rent for Land/Building/Furniture & Fittings||10% TDS on the Rent amount paid||TDS to be deducted and deposited monthly|
|Individual/HUF not liable to Tax Audit||5% TDS on the Rent Paid in cases where more than Rs.50,000/- is paid per month as rent||TDS to be deducted and deposited once at the end of the financial year or end of lease|
Deducted TDS amount should pay to the government made within 7 days from the end of the month in which the deduction is made. In case the amount has been paid in the month of March, the time limit is the 30th of April.
TDS Return Due Date for Every Quarter
|Quarter Period||Last Date of Filing|
|1st Quarter – April, May, June||31st July 2019|
|2nd Quarter – July, August, September||31st October 2019|
|3rd Quarter – October, November, December||31st January 2020|
|4th Quarter – January, February, March||31st May 2020|
Due Dates for TDS Payment Financial Year 2019-20
|Month||Due Date for TDS Payment|
|April 2019||7th May 2019|
|May 2019||7th June 2019|
|June 2019||7th July 2019|
|July 2019||7th August 2019|
|August 2019||7th September 2019|
|September 2019||7th October 2019|
|October 2019||7th November 2019|
|November 2019||7th December 2019|
|December 2019||7th January 2020|
|January 2019||7th February 2020|
|February 2019||7th March 2020|
|March 2019||7th April 2020|
Penalty for Late Filing TDS Return
Under section 26QC Late filing of TDS Return, you have to pay a fine of Rs. 200 per day until your return is filed. The total late fees should not exceed the total amount of TDS which is required to be deducted.
TDS on Advance Rent
If you paid Advance rent to the landlord for more than one financial year – Advance Rent on TDS is also liable to be deducted at source in the year of receipt. The credit for TDS would be allowed to the assessee on the same proportion in which such income for rent is offered for taxation for different assessment years based on the single TDS certificate furnished for the entire advance rent.
In cases Advance rent paid and TDS on Rent is also deducted but late rent agreement gets terminated or asset transferred or being sold resulting balance advance is refunded to the tenant. As the case may be, the TDS credit on rent has not been availed till the transfer or sale is made, should be credited to the new owner.
Key Notes for the Owner of the Property:
- The property owner has to provide PAN to the Tenant for furnishing information regarding TDS to the Income Tax Department.
- You have to verify your Form 26AS Annual Tax Statement to know the taxes deducted by the Tenant or not.
- Collect TDS certificate in Form 16C from the tenant which has been downloaded from TRACES.