TDS on Rent of Property

FAQ's / TDS on Rent of Property

General

The Finance Act, 2017 has introduced section 194-IB providing that Tenant of a property making monthly rent payment exceeding ₹ 50, 000 is required to deduct tax at the rate of 5% from the rent payable to a resident landlord.

The tenant of the property being an individual or a HUF (not liable to audit u/s 44AB) would have to deduct the TDS and deposit the same in Government treasury.

Tenant or Payer of the rent on property is not required to procure Tax Deduction Account Number (TAN). The Tenant is required to quote his or her PAN and PAN of the landlord.

The Tenant of the property (deductor of tax) has to furnish information regarding the transaction, online on the TIN website i.e. www.tin-nsdl.com. After successfully providing details of transaction, deductor/tenant can:

  • Either make the payment online (through e-tax payment option) immediately; Or
  •  Make the payment subsequently through e-tax payment option (net-banking account) or by visiting any of the authorized Bank branches. However, such bank branches will make e-payment without digitization of any challan. The bank will get the challan details from the online form filled on TIN website(www.tin-nsdl.com)  

If any problem is encountered at the NSDL e-Gov website while entering details in the online form, then contact the TIN Call Center at 020 - 27218080 or write to us at (Please indicate the subject of the mail as Online Payment of Direct Tax_ TDS on rent of property).

Form 26QC is the challan-cum-statement for reporting the transactions liable to TDS on rent under section 194-IB of the Income-tax Act, 1961. It is an online form available on the TIN website.

The due date of payment of TDS on rent is thirty days from the end of the month in which the deduction is made.

Example: If a taxpayer has made payment of rent in the month of December, then corresponding TDS should be deposited on or before thirty days i.e. January 30th.

According to rule, Taxpayer/Tenant should furnish challan-cum-statement in Form 26QC in following scenarios:-

  • At the end of the FY or in the month when the premise is vacated / termination of agreement. However, taxpayer has to mandatorily file the Form at the end of each Financial Year (in case the agreement period contains more than one FY and rent has been paid/credited during the year)
  • In the month when the premise is vacated/ termination of agreement ( in case the agreement period falls in the same FY)
  • Example 1 (Rent Agreement falling across two FY):- Tenant Mr. A has entered into a tenancy agreement with Landlord Mr. X for the period of 11 months from October 1, 2017 to August 31, 2018 @ rent of Rs. 60,000.

    Explanation: - In this case, Mr. A should file Form 26QC twice i.e. firstly at the end of the FY 2017-18 (on March 31, 2018) and secondly at the end of the tenancy period (on August 31, 2018). Following values will be captured in the below fields:

     

     

    Example 2 (Rent Agreement falling in same FY):- Tenant Mr. B has entered into a tenancy agreement with Landlord Mr. Y for the period of 6 months from June 1, 2017 to November 30, 2017 @ rent of Rs. 80,000 for 6 months

    Explanation: - In this case, Mr. B will have to file Form 26QC only once i.e. at the end of tenancy period (on November 30, 2017). Following values will be captured in the below fields:

     

    •  Acknowledgment number for the Form 26QC furnished is available in the Form 26AS (Annual Tax Statement) of the Deductor (i.e. Tenant/ Payer of property). The same can be viewed from the TRACES website (www.tdscpc.gov.in) or
    • Taxpayer can also click the option ‘View Acknowledgment’ hosted on the TIN website. Taxpayer needs to enter PAN of the Tenant and Landlord, Total Payment and Financial Year (as mentioned at the time of filing the Form 26QC) to retrieve the Acknowledgment Number.

    The deductor may access the link “E-tax on subsequent date” on the TIN website. On entering the details as per the acknowledgment slip, deductor will be provided options to Print the Form 26QC.

    Form 16C is the TDS certificate to be issued by the deductor (Tenant of property) to the deductee (Landlord of property) in respect of the tax deducted and deposited as TDS on rent under section 194-IB of the Income-tax Act, 1961.

    Form 16C will be available for download from the website of Centralized Processing Cell of TDS (CPC-TDS), www.tdscpc.gov.in

    Tenant may approach any of the authorized Bank Branch to facilitate in making e-payment.

    e-payment of taxes at subsequent date will be linked to the FORM 26QC based on Acknowledgement number generated at the time of filing of Form 26QC.

    Online challan-cum-statement in Form 26QC is to be filed by each tenant for unique tenant-landlord combination for respective share. E.g. in case of one tenant and two landlords, two forms have to be filed in and for two tenants and two landlords, four forms have to be filed for respective rent shares.

    Provision to enter Tax amount (comprising of basic tax, interest and fee) in Form 26QC is given in TIN website and Bank's site.

    As per section 234E of the Income-tax Act, 1961 read with Rule 31A (4B) of Income-tax Rules, 1962, failure on part of deductor (tenant/lesse/payer) to furnish challan-cum-statement in Form No. 26QC electronically within 30 days from the end of the month in which the tax deduction is made will attract levy of fee for default in furnishing statement at the rate of ₹200 for every day to be paid by the deductor (tenant/lessee/payer).

    Payment through e-tax payment option immediately

    E-Payment facilitates payment of taxes online by taxpayers. To avail this facility the taxpayer is required to have a net-banking account with any of the Authorized Banks or a debit card in case of some banks. Please follow the steps as under to pay tax online:-

    Step 1

    1. Log on to NSDL e-Gov-TIN website (www.tin-nsdl.com).
    2. Click on the option “Online form for furnishing TDS on Rent (Form 26QC)”.
    3. Select Form 26QC (Payment of TDS on Rent of Property)

    Step 2

    After selecting the form you will be directed to the screen for entering certain information.

    Example:-


    a) Permanent Account Number of the Tenant and Landlord
    b) Address of the Tenant and Landlord as well as the Property being let out
    c) Financial Year will be populated on the basis of Date of Payment/Credit selected in the Form.
    d) Major Head Code - Indicates the type of tax applicable viz; Corporation Tax (Companies)/ Income Tax (Other than Companies) will be populated based on Landlords PAN
    e) Total Value of Rent Payable
    f) Period of Tenancy
    g) Date of Payment/Credit
    h) Date of Deduction
    i) Amount Paid/Credited
    j) TDS Amount
    k) Select the option for “Payment of taxes immediately”

    It is important to ensure that PAN of Tenant and Landlord are correctly mentioned in the form. There is no online mechanism for subsequent rectification. Deductor will have to approach the TDS - Assessing Officer or CPC-TDS for rectification of errors.

    Step 3

    After entering all the above detail, click on PROCEED button. The system will check the validity of PAN. In case PAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.

    If PAN is available then TIN system will display the contents you have entered along with the “Name” appearing in the ITD database with respect the PAN entered by you.

    If PAN of the landlord is not available (select PAN of landlord as PAN Not Available) TDS has to be deducted under the provisions of section 206AA of the Income-tax Act, 1961 and such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

    Step 4

    You can now verify the details entered by you. In case you have made a mistake in data entry, click on “EDIT” to correct the same. If all the detail and name as per ITD is correct, click on “SUBMIT” button. Ten digit alpha numeric ACK no. will be generated and you will be directed to the net-banking site provided by you.

    Please be informed that the name and status of PAN is as per the ITD PAN Master. You are required to verify the name before making payment. In case any discrepancy is observed, please confirm the PAN entered by you. Any change required in the name displayed as per the PAN Master can be updated by filling up the relevant change request forms for PAN. If the name is correct, then click on "Confirm".

    Step 5

    After confirmation an option will be provided for submitting to Bank. On clicking on Submit to Bank, deductor (as per the mode of payment selected while filling the form) will have to key in the debit card details or login to the net-banking site with the user ID/ password provided by the bank for net-banking purpose and enter payment details at the bank site.

    On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.

    To avail this facility the taxpayer is required to have a net-banking account with any of the Authorized Banks or a debit card in case of some banks. List of Authorized Banks is available at the TIN website.

    TIN system will direct you to net-banking/Debit card facility of your bank. You will have to log on to the net banking site of your bank using your login ID and password/PIN provided by the bank. The particulars entered by you at TIN website will be displayed again.

    You will now be required to enter the amount of tax you intend to pay and also select your bank account number from where you intend to pay the tax. After verifying the correctness, you can proceed with confirming the payment.

    Your bank will process the transaction online by debiting the bank account indicated by you and generate a printable acknowledgment indicating the Challan Identification Number (CIN). You can verify the status of the challan in the “Challan Status Inquiry” at NSDL e-Gov-TIN website using CIN after a week, after making payment.

    You will have to check the net-banking webpage of your bank’s website for this information.

    Your Bank provides facility for re-generation of electronic challan counterfoil kindly check the Bank website, if not then you should contact your bank and request them for duplicate challan counterfoil.

    If any problem encountered while entering the financial details at the net-banking webpage of your bank, then you should contact your bank for assistance.

    Payment of TDS subsequently

    Using this facility deductor (Tenant) can furnish the details online and make the payment of taxes subsequently either through net-banking account or by visiting any of the authorized bank branches. Following are the steps to avail this facility

    Step 1

      a)  Log on to NSDL e-Gov-TIN website (www.tin-nsdl.com).
      b)  Click on the option “Online form for furnishing TDS on Rent (Form 26QC)”.
      c) Select Form 26QC (Payment of TDS on Rent of Property)

    Step 2

    After selecting the form you will be directed to the screen for entering certain information.

    Example:-

      a)  Permanent Account Number of the Tenant and Landlord
      b)  Address of the Tenant and Landlord as well as the Property being let out
      c)  Financial Year will be populated on the basis of Date of Payment/Credit selected in the Form.
      d)  Major Head Code - Indicates the type of tax applicable viz; Corporation Tax (Companies)/ Income Tax (Other than Companies) will be populated based on Landlords PAN
      e)  Total Value of Rent Payable
      f)  Period of Tenancy
      g)  Date of Payment/Credit
      h) Date of Deduction
      i)  Amount Paid/Credited
      j)  TDS Amount
      k)  Select the option for “Payment of taxes on Subsequent Date”

    It is important to ensure that PAN of Tenant and Landlord are correctly mentioned in the form. There is no online mechanism for subsequent rectification. Deductor will have to approach the TDS - Assessing Officer or CPC-TDS for rectification of errors.

    Step 3

    After entering all the above detail, click on PROCEED button. The system will check the validity of PAN. In case PAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.

    If PAN is available then TIN system will display the contents you have entered along with the “Name” appearing in the ITD database with respect the PAN entered by you.

    If PAN of the landlord is not available (select PAN of landlord as PAN Not Available) TDS has to be deducted under the provisions of section 206AA of the Income-tax Act, 1961 and such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

    Step 4

    You can now verify the details entered by you. In case you have made a mistake in data entry, click on "EDIT" to correct the same. If all the detail and name as per ITD is correct, click on "SUBMIT" button. Ten digit alpha numeric ACK no. will be generated and you will be provided with an option to print an Acknowledgment slip.

    Please note that the name and status of PAN is as per the ITD PAN Master. You are required to verify the name before making payment. In case any discrepancy is observed, please confirm the PAN entered by you. Any change required in the name displayed as per the PAN Master can be updated by filling up the relevant change request forms for PAN. If the name is correct, then click on "Confirm".

    Step 5

    With the printout of the Acknowledgment slip, you may visit any of the authorized Bank branches to make the payment of TDS subsequently. The Bank will make the payment through its net banking facility and provide you the Challan counterfoil as acknowledgment for payment of taxes. Based on the information in the Acknowledgment slip, the bank will make the payment only through net-banking facility by visiting tin-nsdl.com and entering the acknowledgement number duly generated by TIN for the statement already filled by the buyer in respect of that transaction.

    In case you desire to make the payment through e-tax payment (net banking account) subsequently, you may access the link “E-tax on subsequent date” on the TIN website. On entering the details as per the acknowledgment slip, you will be provided an option to submit to the bank wherein you have to select the Bank through which you desire to make the payment. You will be taken to the net banking login screen wherein you can make the payment online.