TDS on Rent Above 50,000: In Budget 2017, the officials of the Income Tax government added a new Section – 194IB – to bring the high rental income category into the tax net. The TDS Rate Chart for Rent payment by an individual or HUF is 5% under Section 194IB of Income Tax. This means that Individuals and HUFs who pay rent of Rs 50,000 or more are required to deduct TDS at a rate of 5% under this section. This section of the income tax act is effective from 1st June 2017.
Earlier, only those individuals/HUFs who are subject to a tax audit (under section 44AB) must deduct TDS at a rate of 10%. Since this section came into existence, regardless of the amount of rent paid, the individual/HUF not subject to tax audit was barred from deducting TDS. However, if the rent payment is Rs 50,000 or more, such a person or HUF is now required to deduct TDS at a rate of 5%. So in this article, let’s understand all the details on TDS on rent limit and how to pay the TDS on rent using Rs.50,000 using Form 26QC and Form 16C.
- When Should I Pay TDS On Rent For FY 2020-21?
- How Can I Pay TDS On Rent?
- How To Pay TDS On Rent Using Form 26QC?
- What After Paying TDS On Rent Using Challan 26C?
- How To Download Form 16C TDS?
- How To Calculate TDS On Rent With Example?
- FAQ’s on TDS on Rent 194IB
Usually, TDS Rent is deducted only once in every financial year. This TDS on rent is deducted either when the individual pays the rent to the landlord during the last month of the financial year or when the lease ends if the property is vacated during the year. In both cases, the TDS will be deducted, whichever comes earlier. However, the taxpayer will have to file the Form at the end of each financial year if the agreement term crosses more than one financial year and the rent was charged or credited during the year.
One must note that any individual will have to pay the TDS on rent within 30 days from the date of tax deducted. The TDS on rent can be paid using Form 26QC challan. Any individual will be able to pay the TDS via online mode by the income tax government-approved banks.
To pay the TDS on rent using form 26QC, one will have to fill in the details in Form 26QC. The steps to fill the form are given below:
- Step 1: Visit the official website of TIN website: www.tin-nsdl.com
- Step 2: Now, on the homepage, click on “Services” and select “TDS on Rent Property.”
- Step 3: A new page will open. Now click on “Online form for furnishing TDS on property (Form 26QC)“.
- Step 4: Here, select the “TDS on Rent of Property (Form 26QC)” and click on “Proceed.”
- Step 5: A new page will open. Enter all the necessary details.
- Step 6: Here, you will have to enter the following things. Such as “Taxpayers Info, Address, Property Details, Payment Info.”
- Step 7: Now click on “Proceed.”
- Step 8: Now, review your details and click on the “Confirm” button.
- Step 9: After clicking on confirm button, an acknowledgment number will be generated. Note down the acknowledgment number.
- Step 10: Now, Form 26QC will be generated. You may print it out and send it to the bank for payment by clicking submit to the bank.
- Step 11: As per the bank channel you selected in the payment info, proceed with your challan payment.
- Step 12: Once your payment is successful, download a copy of the challan for future reference.
You can also obtain the challan and pay the TDS offline by visiting the bank channel you have selected.
Once you process the payment and have challan 26QC, the next step is to submit Form 16C as a certificate. The Indian government has introduced Form 16C, a new TDS certificate. It represents the number of TDS deducted by the individual/HUF on rent at 5% (u/s 194IB). It’s the same as Form 16 or Form 16A, which are used for salaries and other transfers, respectively. Within 15 days of the due date of the challan cum statement in Form 26QC, the individual deducting TDS on the rent must provide Form 16C to the payee.
The steps to download Form 16C is given below:
- Step 1: Log on to the official website of TRACES with your credentials.
- Step 2: After logging in a pop-up message will appear on the screen. Click the “I Agree” checkbox after reading the instructions.
- Step 3: Now under the “Quick Links” select “Form 16B/16C/16D”.
- Step 4: Now the page will be directed. Now select the Form Type as “26QC“.
- Step 5: Enter your “Acknowledgment Number, Assessment Year, PAN Card of the landlord“.
- Step 7: Click on “Proceed“.
- Step 8: A new page will open. Now review the details and “Submit Request“.
- Step 9: A message will pop up with your Request Number.
- Step 10: Now in your dashboard, go to the download section and Enter the request number.
- Step 11: If the file is available, click on the download link and the file will be downloaded in ZIP format.
- Step 12: To open the downloaded file, enter your date of birth as per the PAN Card and take the printouts to submit to the landlord.
Now, let’s understand how to pay TDS on rent with the help of an example. Kumar is a salaried employee who is responsible pay monthly rent of Rs.60,000. So now in the month of March, he has to deduct the TDS of 5% for the entire financial year. Now Kumar’s TDS on rent is calculated is Rs.36,000 which is 5% of Rs. 7,20,000. Further, this TDS, along with Form 26QC, must be deposited by the 30th of April or within 30 days of the end of the month in which TDS is deducted. Also, Kumar should give the landlord Form 16C by the 15th of May, or within 15 days of the due date for the challan cum statement in Form 26QC.
The frequently asked questions on TDS on Rent 194IB are given below:
How to avoid TDS on rent?
Any individual can avoid the TDS deductions by investing in a variety of tax-saving schemes under Sections 80C and 80D, or by preparing to do so within that fiscal year. Provided all the investment-related information in the form along with the necessary proofs to avoid TDS.
If I delay in filing Form 26QC, will the officials impose a penalty?
One will have to pay Rs.200 as the fine if he/she delays filing the Form 26QC.
Can I pay TDS on Rent through Oriental Bank of Commerce?
Yes, one can pay TDS on rent through the Oriental Bank of Commerce.