Section 194-IB - TDS On Rent Of Property

Renting a home can be a fairly intricate procedure that needs to be attended to meticulously. Out of many things to take care of, you must be aware of Section 194 IB of the Income Tax Act 1961 , especially if the rent of the property is exceeding Rs 50,000 per month.

In simple words, Section 194 IB is associated with a TDS deduction on rent paid to a landlord/resident. Made effective from June 1st 2017, this section states TDS on rent is to be deducted by the tenant if the monthly rental exceeds Rs. 50,000 for a month or part of a month during the year. This is applicable to individuals and HUFs renting a property.

• The individual's or Hindu Undivided Family's (HUFs) annual income is lesser than the limit as per section 44AB.
• The property owner receiving the rent is an Indian resident. If the property owner is Non resident it is not covered under Section 194 IB.
• The payment of rent needs to exceed Rs. 50,000 per month.
• The rate of TDS is 5%.
• The landlord can submit form 13 to the IT officer and acquire a certificate for no TDS deduction. In that case, the tenants don’t need to deduct TDS.

• The tenant is liable to make this deduction, provided the conditions mentioned above are met, and also make sure that the PAN of the landlord is submitted to the Income Tax Department
• The tenant is required to provide information about the transaction using form 26QC available on the TIN (Tax Information Network) website.
• The due date for depositing the TDS with the government is 30 days from the end of the month in which the rent is paid.
• The tenant needs to issue a Form 16 to the landlord/resident stating the TDS deduction. This has to happen within 15 days of the last day to deposit the TDS.
• The taxpayer needs to submit a form 26QC at the end of the financial year or when the premises are vacated. This can be accessed from the TIN website.

• 1% interest is charged if you fail to deposit the TDS within the stipulated period.
• In case you fail to issue the certificate to the landlord, 1.5% interest is charged per month.
• Tenants failing to file form 26QC timely could be subjected to a penalty of Rs200 per day.
• A daily penalty of Rs100 is applicable if Form 16 is not issued in time
• Defaulters also have the chance of facing imprisonment.

Being a relatively new insertion, there is still some ambiguity about Section 194 IB, and we hope that this article has provided you with the required clarity about the same. These regulations have been put in place to protect our rights, and following them is ensuring that our freedom is not curtailed.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.