Are you Paying Rent more than 50,000 per month ?

 

 

1.       Applicability

As per Section 194-IB, any Person being individual or HUF (who is not liable for audit under section 44AB) paying rent exceeding 50,000 per month of part of month, to any resident, is required to deduct TDS @5%. However, if the landlord is non-resident, then the liability to deduct TDS arises under section 195 of the income tax act.

 

2.       Manner of Deposition

Tenant is required to file form 26QC (Challan-cum statement form) within 30 days from the date of credit of rent for the last month of previous year or the last month of tenancy in case of vacancy during the year, as the case may be.  Further, if the rent period covers more than one financial year, then in that case form 26QC needs to be submitted the end of each financial year.

 

3.       Issuance of TDS Certificate

Tenant needs to issue a TDS Certificate (Form 16C) to landlord as a proof of payment within 15 days from the due date of furnishing of Form 26QC.

 

4.       TAN Not required

The provisions of section 203A containing the requirement of obtaining Tax deduction account number shall not apply to the person required to deduct the tax in accordance with the provisions of section 194IB.

 

5.       Deduction at Higher rate

The provisions of section 206AA is applicable in case where PAN of the landlord is not available, then tenant is required to deduct TDS @20% instead of 5% subject to the condition that the amount of tax shall not exceed the amount of rent payable for the last month of the previous year or last month of tenancy as the case may be.

 

6.       Scenario in case of Co-ownership

In case where rent is payable to 2 or more co-owners then the limit of Rs 50,000/- needs to be checked for each co-owner separately. Form 26QC is exclusive statement between one tenant and one owner. Hence in case where there are 2 co-owners and 2 tenants, then 4 Form 26QC needs to be filed.

 

7.       Penalty in case of non-compliance

In case tenant delays in deposition of taxes, then he may be liable to pay interest @1% per month or part thereof.

As per section 234E, in case of non-filing of Form 26QC, penalty of Rs 200 per day would be attracted subject to maximum amount of tax deductible. 

Further if the tenant does not issue the form 16C, penalty of Rs 100 per day would be levied till the period of failure continues.

Location: Pitam Pura, New Delhi, Delhi, India

Comments

Post a Comment

Popular posts from this blog

Duties and Responsibilities of Deductor

Image
  TDS (Tax Deducted at Source) is the Mechanism of Tracking the transactions among payer and payee. TDS is also one of the modes of collection of taxes. The concept of TDS envisages the principles of the "Pay as you Earn" scheme also known as withholding tax in many other countries.   The person responsible for deducting TDS is termed as Deductor/Payer and the person who receives the payment after-tax deduction is termed as Deductee/Payee.     As per the provision of Section 200, Deductor is responsible to perform some duties: 1) Obtain TAN (Tax Deduction Account Number) ·          TAN is a 10-digit alphanumeric number. The provisions of section 203A contain the requirement of obtaining TAN. ·          However, a person required to deduct tax under following sections can use PAN in place of TAN as such person is not required to obtain TAN. 194-IA Payment on tran...
Read more

Factors affecting Investment Decision for Individuals

Image
  The Investment decision relates to decision made by Investor’s with respect to the amount of funds to be deployed in the investment opportunities. However, there are certain aspects that influence the decision of the investor’s which are discussed below in detail: 1.     Security This starts with the safety of the capital invested. Investor is always keen on getting higher returns which in turn is related to ability of taking risks. There is a famous saying that “Higher the risk, higher the return” that is applicable to most of the investment avenues however one should always know that “Lower the risk, Higher are the chances of capital being secured “. Hence in order to understand the safety of investment, one need to understand the level of risks involved.   2.     Liquidity Liquidity means how easily and quickly one can liquidate the investments. The degree of ease could be different across different categories. Certain investment opti...
Read more