TDS on Rent of Property

Introduction

As per Finance Act, 2017, “TDS on Rent” under section 194-IB is liable to be deducted by Individuals or HUFs (Hindu Undivided Family) (other than an individual or a HUF, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid) responsible for paying to a resident monthly rent exceeding ₹ 50,000. Section 194-IB of the Income Tax Act, 1961 states that for all the transactions with effect from June 1, 2017, tax @5% should be deducted by the Tenant/ Lessee/ Payer of the property at the time of making payment of rent (to Landlord / Lessor/ Payee). Tax so deducted should be deposited to the Government Account through any of the authorized bank branches.

Detailed procedure, list of Bank branches authorized to accept TDS and Frequently Asked Questions (FAQs) are available on this website for reference.

Points to be remembered by the Tenant of the Property:

  1. All individuals or HUFs (except those liable to audit under clause a and b of section 44AB) paying monthly rent to a resident in excess of Rs. 50,000 are liable to deduct TDS under section 194-IB
  2. Deduct tax @ 5 % from the rent payment made to the Landlord.
  3. Collect the Permanent Account Number (PAN) of the Landlord and verify the same with the Original PAN card.
  4. PAN of the Landlord as well as Tenant should be mandatorily furnished in the online Form for furnishing information regarding the rent.
  5. Do not commit any error in quoting the PAN or other details in the online Form. For the purpose of error rectification you have to contact Income Tax Department.
  6. Download and furnish TDS certificate in Form 16C from TRACES and issue to the Landlord / Lessor/ Payee within 15 days from the due date of furnishing of the challan-cum-statement in Form 26QC.
  7. If the Landlord / Lessor/ Payee is a non-resident, liability to deduct TDS arises under section 195 of the Income-tax Act, 1961

Points to be remembered by the Landlord of the Property:

  1. Provide your PAN to the Tenant for furnishing information regarding TDS to the Income Tax Department.
  2. Verify deposit of taxes deducted by the Tenant in your Form 26AS Annual Tax Statement.
  3. Insist on obtaining Form 16C from the tenant which has been downloaded from TRACES website only.

Frequently Asked Questions

Online form for furnishing TDS on property (Form 26QC)

E-tax payment on subsequent date

View Acknowledgment Number

List of Authorized Banks for e-payment