Section 194-IB of the Income-tax Act mandates that individuals or Hindu undivided families (HUFs) must deduct 5% TDS on rent payments exceeding ₹50,000 per month to residents. The Finance Bill 2024 proposes to reduce this TDS rate to 2%, effective from October 1, 2024. This amendment aims to ease tax compliance for landlords while ensuring revenue collection for the government.
Budget 2024: Section 194-IB – Payment of rent by certain individuals or HUF
As per provisions of section 194-IB, 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 5% of such income as income-tax thereon.
2. It is proposed that TDS under section 194-IB of the Act be reduced from 5% to 2%.
3. The amendment will take effect from 1st day of October 2024.
[Clause 59]
Extract of Clause 59of Finance Bill 2024
Clause 59 of the Bill seeks to amend section 194-IB of the Income-tax Act relating to payment of rent by certain individuals or Hindu undivided family.
Sub-section (1) of the said section provides that 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.
It is proposed to amend the said sub-section so as to reduce the said rate of tax deduction from five per cent. to two per cent.
This amendment will take effect from 1st October, 2024.
Amendment of section 194-IB.
In section 194-IB of the Income-tax Act, in sub-section (1), for the words “five per cent.”, the words “two per cent.” shall be substituted with effect from the 1st day of October, 2024.
