TDS on Rental Property in India – Guidelines & FAQs

Last Updated at: December 31, 2019
884
TDS on rent on property in India

TDS on Rent is applied under section 194I and/or section 194-IB of Finance Act, 2017, Section 194I – Any person, not being an individual or a Hindu undivided family, who is responsible for paying rent can deduct income-tax at the rate of

  1. 2% for the use of any machinery or plant or equipment
  2. 10% for the use of any land or building (including factory) or land appurtenant to a building or furniture or fittings

At the time of credit of such amount, the payee can issue rent through cash or cheque or draft or electronic mode.

Section 194-IB states that for all the transactions with effect from June 1, 2017, 5% of tax should be deducted by the Tenant/ Lessee/ Payer of the property at the time of making payment of rent (to Landlord / Lessor/ Payee). The tax so deducted should be deposited to the Government Account through any of the authorized bank branches.

However, no deduction is available under this section where the amount of such income credited or paid by the person or the payee, do not exceed Rs.240000 during a financial year.

And, no deduction is allowed under this section by the way of rent paid to a business trust, real estate investment trust, referred to in clause of Section 10, owned directly by such business trust.

E-file Your Income Tax Returns

The term rent means any payment made under lease, tenancy on

  1. Land
  2. Building or apartment
  3. Machinery
  4. Plant
  5. Equipment
  6. Furniture
  7. Fittings

Guidelines for the tenant of the Property:

  1. Every Individual or HUF paying monthly rent to a resident more than Rs.50,000 is liable to deduct TDS under Section 194IB.
  2. A tenant can deduct tax at the rate of 5% from the rent payable to the landlord.
  3. It’s necessary to collect the Permanent Account Number (PAN) of the landlord and also get it verified with the original PAN card.
  4. When you are furnishing information regarding the rent of the property, it is mandatory to establish PAN of the landlord and the tenant in the online form.
  5. If you commit any error in furnishing PAN or any other details in the online form, then for error correction you have to contact the Income-tax Department.
  6. Furnish TDS certificate in Form 16C and issue to landlord or payee or lessor within 15 days from the date of furnishing details in challan-cum-statement in Form 26QC.
  7. Section 195 of the Income-tax Act, 1961 deals with the deduction of TDS if the landlord/lessor/payee is a non-resident.

Guidelines for the landlord of the Property:

  1. In Form 26AS Annual Tax Statement, you can verify the deposit of taxes deducted by the tenant.
  2. Make sure you get Form 16C from the tenant which has been obtained from the TRACES website.
  3. Provide details of PAN to the tenant for furnishing information regarding TDS to the Income Tax Department.

Who is responsible to deduct the TDS on Rent of the Property under Section 194IB?

Any individual or a HUF who is not liable to audit under Section 44AB has to deduct TDS of rent and the same should be reported in the prescribed under Income-tax Department.

Do I need to get TAN to report TDS on the rent of property?

The property’s tenant is not required to get the Tax Deduction & Collection Account Number (TAN). Instead, Tenant is required to furnish his PAN and Pan of the landlord or Lessor.

How to pay TDS on rent of property?

The tenant of the property has to furnish details regarding the transaction on the TIN website – www.tin-nsdl.com and make payment online through (e-tax payment option) immediately or make payment subsequently i.e., not immediately after furnishing transaction details through e-tax payment option (net banking) or by visiting any of the authorised bank branches.

How to rectify/correct or if encounter any error on the NDSL website while entering the online form details?

If you face any problem at NDSL e-gov website while entering transaction details in the online form, then contact the TIN call centre at 020- 2721 8080 or send mail at tininfo@nsdl.co.in.

Please use the subject line – Online Payment of Direct Tax_ TDS on rent of property while sending an email.

What is Form 26QC?

Form 26QC is a challan-cum-statement online form available on the TIN website. It is used to report TDS on rent under section 194IB of the Income-tax Act, 1961.

What is the due date of payment of TDS deducted on payment of rent u/s 194IB?

TDS payment on rent of the property has to be made within 30 days from the end of the month in which deduction is made.

Conclusion: 

Understanding TDS on rent is vital if you are planning to rent or lease a home or other property from a landlord/property owner shortly. Thus, the article is a detailed explanation of TDS on the rent of the property by individuals or HUF.

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TDS on Rental Property in India – Guidelines & FAQs

884

TDS on Rent is applied under section 194I and/or section 194-IB of Finance Act, 2017, Section 194I – Any person, not being an individual or a Hindu undivided family, who is responsible for paying rent can deduct income-tax at the rate of

  1. 2% for the use of any machinery or plant or equipment
  2. 10% for the use of any land or building (including factory) or land appurtenant to a building or furniture or fittings

At the time of credit of such amount, the payee can issue rent through cash or cheque or draft or electronic mode.

Section 194-IB states that for all the transactions with effect from June 1, 2017, 5% of tax should be deducted by the Tenant/ Lessee/ Payer of the property at the time of making payment of rent (to Landlord / Lessor/ Payee). The tax so deducted should be deposited to the Government Account through any of the authorized bank branches.

However, no deduction is available under this section where the amount of such income credited or paid by the person or the payee, do not exceed Rs.240000 during a financial year.

And, no deduction is allowed under this section by the way of rent paid to a business trust, real estate investment trust, referred to in clause of Section 10, owned directly by such business trust.

E-file Your Income Tax Returns

The term rent means any payment made under lease, tenancy on

  1. Land
  2. Building or apartment
  3. Machinery
  4. Plant
  5. Equipment
  6. Furniture
  7. Fittings

Guidelines for the tenant of the Property:

  1. Every Individual or HUF paying monthly rent to a resident more than Rs.50,000 is liable to deduct TDS under Section 194IB.
  2. A tenant can deduct tax at the rate of 5% from the rent payable to the landlord.
  3. It’s necessary to collect the Permanent Account Number (PAN) of the landlord and also get it verified with the original PAN card.
  4. When you are furnishing information regarding the rent of the property, it is mandatory to establish PAN of the landlord and the tenant in the online form.
  5. If you commit any error in furnishing PAN or any other details in the online form, then for error correction you have to contact the Income-tax Department.
  6. Furnish TDS certificate in Form 16C and issue to landlord or payee or lessor within 15 days from the date of furnishing details in challan-cum-statement in Form 26QC.
  7. Section 195 of the Income-tax Act, 1961 deals with the deduction of TDS if the landlord/lessor/payee is a non-resident.

Guidelines for the landlord of the Property:

  1. In Form 26AS Annual Tax Statement, you can verify the deposit of taxes deducted by the tenant.
  2. Make sure you get Form 16C from the tenant which has been obtained from the TRACES website.
  3. Provide details of PAN to the tenant for furnishing information regarding TDS to the Income Tax Department.

Who is responsible to deduct the TDS on Rent of the Property under Section 194IB?

Any individual or a HUF who is not liable to audit under Section 44AB has to deduct TDS of rent and the same should be reported in the prescribed under Income-tax Department.

Do I need to get TAN to report TDS on the rent of property?

The property’s tenant is not required to get the Tax Deduction & Collection Account Number (TAN). Instead, Tenant is required to furnish his PAN and Pan of the landlord or Lessor.

How to pay TDS on rent of property?

The tenant of the property has to furnish details regarding the transaction on the TIN website – www.tin-nsdl.com and make payment online through (e-tax payment option) immediately or make payment subsequently i.e., not immediately after furnishing transaction details through e-tax payment option (net banking) or by visiting any of the authorised bank branches.

How to rectify/correct or if encounter any error on the NDSL website while entering the online form details?

If you face any problem at NDSL e-gov website while entering transaction details in the online form, then contact the TIN call centre at 020- 2721 8080 or send mail at tininfo@nsdl.co.in.

Please use the subject line – Online Payment of Direct Tax_ TDS on rent of property while sending an email.

What is Form 26QC?

Form 26QC is a challan-cum-statement online form available on the TIN website. It is used to report TDS on rent under section 194IB of the Income-tax Act, 1961.

What is the due date of payment of TDS deducted on payment of rent u/s 194IB?

TDS payment on rent of the property has to be made within 30 days from the end of the month in which deduction is made.

Conclusion: 

Understanding TDS on rent is vital if you are planning to rent or lease a home or other property from a landlord/property owner shortly. Thus, the article is a detailed explanation of TDS on the rent of the property by individuals or HUF.

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