The government last year introduced Section 194IB of the I-T Act, which makes it mandatory that individuals and HUFs who are paying rent of more than Rs 50,000 per month have to deduct 5% of the rent paid in a financial year as tax.
If you are part of multiple tenants sharing an accommodation with the total rental exceeding Rs. 50,000 no deduction of TDS is required. If however you are paying rent to one tenant who in turn is paying it to the landlord, then TDS deduction remains applicable.
TDS Tax deduction Timeline And Deadline
As a tenant you need to deduct TDS only once in a financial year and not for every monthly payment made to the landlord. Tax can be deducted in the last month of the financial year, i.e. March. If however your tenancy is getting over before the end of the financial year, you can deduct tax in the last month of your tenancy. As a tenant, you do not need any tax deduction account number (TAN) for such transactions.
Quantum Of TDS deduction
As an individual or HUF paying a monthly rental of more than Rs. 50,000 for any commercial or residential property, you need to deduct tax at 5% of the total annual rent paid to resident landlord. Remember you will need to furnish the PAN card numbers for both you as a tenant as well as the landlord. If for some reason the landlord’s PAN is not available you will have to deduct TDS at 20% instead of 5% in a normal scenario.
Ways To Pay TDS To I-T Department
You will need to furnish relevant details like yours and landlord’s email ID, PAN card number and phone number by filling Form 26QC. This form is easily available online and is a challan-cum-statement. The tax can be deposited online through net banking or by using Credit or Debit Cards. Once the Form 26QC is filled, you can also deposit TDS by visiting any authorised bank’s branch.
As a tenant make sure to furnish Form 16C (TDS certificate) to the landlord within 15 days of tax submission. This helps the landlord to keep a record as well as cross check for effective TDS submission.
Penalty For Non Compliance
Any delay in tax deduction attracts a fine of 1% interest for every month delay. Deduction but non-payment attracts a fine of 1.5% interest per month. Delayed filling of Form 26QC attracts a penalty of Rs. 200 per day. Any delay in issuing Form 16C can mean a fine of Rs. 100 per day. Post one year of the due date, non submission of Form 26QC can mean a penalty from Rs. 10,000 to Rs. 1 Lakhs.
TDS On Rent At A Glance
- Individuals and HUFs paying a monthly rental exceeding Rs. 50,000 per month must pay TDS.
- For deductions made in March, the last day to deposit tax and file Form 26QC was April 30, 2018.
- PAN card is mandatory for both landlord and tenants.
- In the event of multiple landlords, you must fill out multiple Form 26QC for each landlord.
- Non deduction of tax attracts a penalty of 1% interest each month. The penalty increases to 1.5% if tax is deducted but not paid to the I-T department.
(The writer is CEO, BankBazaar.com)