TDS ON PAYMENT OF RENT MORE THAN RS. 50,000 PER MONTH BY INDIVIDUALs / HUFs
EXISTING LAW
There is an existing provision for deduction of TDS (deduction of tax at source) under section 194-I in the Income Tax Act, 1961 for individuals/HUFs, wherever tax audit is applicable.
INTRODUCTION OF SECTION 194-IB
Now, the Government has widened the scope by introducing a new section 194-IB from June 1, 2017.
Main points of this section are as follows;
- This section requires that every individual and HUF paying rent more than Rs. 50,000/- per month (or part of a month) for the use of any land or building or both, need to deduct TDS at the rate of 5%.
- However if the PAN of recipient is not available, rate of TDS will be 20% (limited to the rent of last month of the tenancy).
- TDS amount shall be deducted in the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be.
- The TDS so deducted shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QC.
- Further every person responsible for deduction of tax under section 194-IB shall furnish the certificate of deduction of tax at source in Form No.16C (TDS certificate) to the payee within fifteen days from the due date for furnishing the challancum-statement in Form No.26QC.
- “Rent” for the above purposes means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.