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Section 194 IB- TDS on Rent

Section 194 IB- TDS on Rent

 

The tax deduction from rent payments is mandated by section ​194IB of the Income-tax Act.

Section 194-IB provides for a tax deduction by specified Individuals or HUFs from the rent paid or payable, if the rent exceeds Rs. 50,000 per month or part of the month during the financial year.​

FAQs on TDS on Rent (Section 194-IB)

Who is required to deduct tax on rent under section 194-IB?

​Any individual or HUF, who is not covered under section 194-I, is required to deduct tax at source under s​ection 194IB on rental payments.

When it is required to deduct tax at source under section 194IB?

​The section provides the following timelines for deduction of tax at source:
(a) Where the property is let out for the whole year

Tax shall be deducted at the time of payment or credit of rent to the account of the payee for the last month of the financial year, whichever happens, earlier.

(b) Where the property is vacated during the year

If property is vacated during the year, tax shall be deducted at the time of payment or credit of rent to the account of the payee for the last month of tenancy, whichever happens earlier.​

What is the threshold limit prescribed for rent for section 194IB?

​The tax shall be deducted under this section if the rent for a month or part of the month exceeds Rs. 50,000 during the financial year. ​

What is the rate at which tax is required to be deducted under section 194IB?

​The tax shall be required to be deducted under s​ection 194IB at the rate of 5%. Further, the rate will not be enhanced by a surcharge or health and education cess.

However, tax deducted under this section shall not exceed the amount of rent paid for the last month of the financial year or the termination of tenancy, as the case may be.​

What will be the rate of TDS under section 194-IB if the payee does not furnish PAN?

​As per s​ection 206AA, if the payee does not furnish PAN, tax shall be deducted at a rate higher of the following:

• The rate prescribed in the relevant provisions of the act, or
• The rate or rates in force, or
• 20%

However, deduction at a higher rate will prevail subject to the condition that the amount of TDS cannot exceed the amount of rent for the last month of the financial year or the termination of tenancy, as the case may be.​

What will be the rate of TDS under section 194-IB if payee is a non-filer of income-tax return?

​Section 206AB provides for deduction of tax at higher rate if the deductee has not furnished the return of income for a specified period. However, the provisions of Section 206AB are not applicable if tax is required to be deducted under s​ection 194-IB

.Whether assessee is required to obtain Tax Deduction or Collection Number (TAN) in case tax is to be deducted under section 194-IB?

There is no requirement to apply or obtain Tax Deduction or Collection Account Number (TAN) for deducting tax under this section. Hence, a deductor can use his PAN in place of TAN.

What is the time limit to deposit the tax amount deducted under section 194-IB?

Where tax is deducted under s​ection 194-IB, it is required to be deposited through a challan-cum-statement in Form No. 26QC within 30 days from the last day of the month in which such tax is deducted. No further statement or form is required to be furnished. In case more than  one  seller, Form 26AS shall be fill up more than according to no. of seller. TDS cerficate shaal be issued to all seller.

Whether the deductor is required to issue TDS certificates to the deductee under section 194-IB?

​A certificate in Form No. 16C shall be issued by the deductor where tax is deducted under s​ection 194-IB. The form shall be issued within 15 days from the due date of furnishing challan-cum-statement in Form No. 26QC.

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