This article focuses on Tax Deducted at source on payment of Rent on Residential property by an individual and HUF which is covered by Section 194-IB. Article also cover Tax deduction under Section 194I on rent by those in Business. Article further covers the comparison between TDS deduction section 194I and 194IB.
1. Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent. of such income as income-tax thereon.
2. The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.
3. The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
4. In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.
|“Rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.|
1. Deduction of TDS u/s 194-IB when rent payment exceeding Rs 50000 for month or part of the month is made.
2. This section is applicable on an individual or a Hindu undivided family who are not required to have tax audit as per Income Tax Act in immediately preceding financial year.
3. The Rate to TDS to be deducted shall be 5%.
4. If PAN of recipient is not available, tax is deductible at the rate of 20%. However, in such case amount of TDS cannot exceed rent payable for the last month of the previous year or last month of tenancy.
5. The above said tax shall be deducted: when rental expense for the last month of the previous year or the last month of tenancy, if the property is vacated during the year is booked in books of accounts, or at the time of payment, whichever is earlier.
6. The tax deductor is not required to apply for TAN in order to deduct TDS U/S 194IB.
7. The certificate of deduction of tax at source is Form No.16C & it has to be submitted to the payee within fifteen days from the due date for furnishing the challan-cum-statement i.e Form 26QC.
|Applicability||It is applicable for any person (not being an Individual or Hindu Undivided Family) who in the last year liable to Tax Audit||This section is applicable on an individual or a Hindu undivided family who are not required to have tax audit as per Income Tax Act.|
|Trigger Limit||Rs. 2,40,000 Per annum||Rs. 50,000 per month or part of the month during financial year|
|TAN requirement||TAN in required||No TAN is required, PAN is sufficient|
|If the rent is being paid to a non-resident, then section 194-IB doesn’t apply. In such cases Section 195 will be applicable.|
Step 1 : Login to TRACES website with “User ID”, “Password” and the “Verification code”. Landing Page will be displayed on the screen.
Step 2 : Click on “Form 16B/16C (For Buyer/ Tenant)” available under “Downloads” tab. taxguru.in
Step 3 : Select “Form Type” “Assessment Year” from drop down list enter “Acknowledgement Number” and “PAN of the Landlord”.
Step 4: After clicking on “Proceed” list of challan(s) will be available to download “Form 16C”.
Step 5 : “Details to be printed on Form 16C” will reflect as per profile information on “TRACES”. Following details will appear-
– Full Name of Person Responsible for Deduction of Tax
– Father’s Name of Person Responsible for Deduction of Tax
– Designation of Person Responsible for Deduction of Tax
and click “Submit Request” to submit request for “Form 16C”.
Step 6: “Request Number” will be generated after submission of request.
Step 7 : In order to track the status of the request click on “Requested Downloads” available under “Downloads” tab.
Step 8 : Click on “Available” status row then click on “HTTP Download” tab to download Form 16C Zip file.Enter the password to open Zip file of “Form 16C”.
Hope this information will help you in your Professional endeavours. For further assistance/query, feel free to write to us.
Author: C S Ekta Maheshwari is the Author of this article and is Company Secretary by profession. The Author can be reached at firstname.lastname@example.org
The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.
(Republished with Amendments)