TDS on Rent of Property to be deducted by Individuals and HUFs also
Earlier to 2017, TDS was required to be deducted under section 194-I only by a specified category of business and professionals who required to get tax audit and when the rent paid/payable during the financial year is more than ₹ 1,80,00.
In budget 2017 certain amendments applied for TDS on rent and rates at which TDS on rent is to be deducted. As per Finance Act, 2017, “TDS on Rent” under section 194-IB is liable to be deducted by Individuals or HUFs also responsible for paying to a resident monthly rent exceeding ₹ 50,000.
Guidelines for individual Tenant and Owner of the property
In order to simplify and reduce the burden on individual tenants and owners Section 194-IB of the Income Tax Act, 1961 Act Provided some guidelines/Points:
A). Guidelines for the Tenant of the Property:
- All individuals or HUFs (except those liable to audit under clause a and b of section 44AB) paying monthly rent to a resident in excess of Rs. 50,000 are liable to deduct 5% TDS under section 194-IB.
- Tenant has to collect the Permanent Account Number (PAN) of the Landlord and verify the same with the Original PAN card.
- 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 Callahan cum statement in Form 26QC.
- In case the Landlord / Lessor/ Payee is a non-resident, liability to deduct TDS arises under section 195 of the Income-tax Act, 1961.
- TDS deduction is optional to be deducted every month and the total TDS For the whole Financial Year is required to be deducted in the last month of the financial year.
- TAN number not required, Use PAN number instead of TAN
B). Guidelines for Landlord of the Property:
- Provide your PAN to the Tenant for furnishing information regarding TDS to the Income Tax Department.
- Verify deposit of taxes deducted by the Tenant in your Form 26AS Annual Tax Statement.
- Ask Form 16C from your tenant which has been downloaded from TRACES website only.
TDS rates on Rent
- Plant, machinery or equipment- 2%.
- Rent of land, building, and furniture for individuals and Hindu Undivided Family- 5%.
- Rent of land, building or furniture in case of others who required tax audit- 10%.
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