• Do an Invidual tenant need to deduct TDS if rent paid is above 50 thousand rupees

I am a salaried individual. resident of India. I stay in a rented house in Mumbai. rent that I pay is above rupees 50 thousand. My question is 1) Am I supposed to deduct TDS and deposit to Govt or is it with land lord 2) If I have to deposit then at what rate I should deduct ? will it be on the total rent of should it on the amount in excess of Rs50000. eg. if rent is 55000 am I supposed to deduct on the whole 55000 or only on 5000 ? 3) if I change house during the year, for both the places I will have to deposit by March ? 4) Am I supposed to pess less rent to the extent of tax ? and do I have to show in my return in any way .. is there a penalty for not deducting TDS.. can landlord pay ?
Asked 5 years ago in Income Tax

1) For rent more than 50,000, you need to deduct TDS one time either at the of leaving the property or in the month of March. You need to deposit it with the govt.through challan cum statement Form 26QC.

2) Rate of deduction would be 5%.It will be on total rent i.e. 55,000

3) Yes you need to deposit for a property where the rent exceeds 50,000.

4) Yes you need to pay rent after deducting tax.

5) You are not required to mention in your ITR.

6) Yes there is a penalty of equivalent amount.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Hi

  1. Yes, you need to deduct and deposit to the government
  2. @5%. It will be on the annual rent paid i.e. 55000*12
  3. Where the property is vacated during the year, the tax needs to be deducted on the last day of the tenancy.
  4. Yes, you need to reduce the rent payment by amount of TDS.

You need to fill an online form - Form 26QC as a TDS return cum payment challan for each landlord.

 

Suppose annual rent to be 500000, TDS would be 5% I.e. 25000. You need to pay 475000 to the landlord during the year as the and deposit 25000 as TDS to the government.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Yes you need to deduct TDS if the rent paid is above 50000. You need to deduct TDS on whole amount and not only on amount in excess of 50000 @5% and land lord can't do that you yourself need to deduct TDS as you are the one paying rent. Yes you need to pay less rent to the extent of TDS as TDS is considered as a part of rent. There is interest for not not paying TDS@1% or 1.5% per month depending on the situation.

If you are paying rent every month you need to deduct it every month and pay within next month to government.

You don't need to show it anywhere in your return of income.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

 

1. Yes.The Finance Act, 2017 inserted a new provision, Section 194IB in the Income Tax Act under which, any person (including Individual/HUF to whom requirement of tax audit is not applicable) paying rent of Rs 50,000 or more per month must deduct TDS at 5%  effective from 1 June 2017(01.06.2017)

 

2. You should deduct TDS @ 5% on Total annual rent paid to resident landlord i.e on Rs 6,60,000 (Rs 55000*12).

 

 

3. TDS can either be deducted at the time of credit of the rent to the account of the payee (landlord) for the last month of the financial year OR the last month of the tenancy if the property is vacated during the year OR

at the time of payment whichever is earlier.

 

If the property is vacated during the year, the tax needs to be deducted on the last day of the tenancy.



4.No, you do not need to show it in your ITR.

You are required to deduct and deposit the taxes through a challan-cum-statement Form 26QC. Form 26QC to be filed  30 days from the end of the month in which TDS deducted.

For, non-deduction of tax, you may be required to pay a penalty equal to amount of taxes not withheld.


Even If you delay in deposit of taxes withheld, you may be liable to pay penal interest at the rate of 1% where there is delay in deducting and depositing the tax or 1.5% per month where tax is deducted but there is delay in depositing the same. 

Thanks & Regards,

Payal Chhajed

 

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

1. Yes you are required to deduct TDS @ 5 %. It will be on total rent i.e Rs 55000.

3. yes you will be required to deposit for both the place.

4. Yes less rent to the extent of tax. (It is just that you are paying Landlord's income tax on his behalf using his money.)No you are not supposed to show it in your in any way. (bdw you might be already claiming HRA house rent deduction).

 

Note : 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.

Chirag Maru
CA, Raipur
210 Answers

5.0 on 5.0

 

An individual paying rent of more than Rs 50,000 per month is required to deduct tax at source (TDS) @ 5% on the rental payments and deposit to government (If landlord does not have PAN, then TDS @ 20%). The TDS is to done on the entire amount of rent. Tenant is required to deduct and deposit the taxes only once in a financial year, through a challan-cum-statement, unless the tenancy ends during the course of the financial year. If it ends during the year, then on the last date of tenancy.  Kindly ensure you have enough rent outstanding to be paid for deducting the taxes.  For the new house you got to deduct in March, for the old house during the year ie last date of tenency.  Yes, to the extent of tax deduct ion, make less payments to landlord.  This is same like a TDS on salary whereby taxes are deducted on your behalf by employer. THE TDS Is not reflected in your return.  Yes there are severe penalty and interest cost for failure to deduct and pay tax.

Jasmina Jain Shah
CA, Greater Mumbai
454 Answers
4 Consultations

5.0 on 5.0

Hi,

 

1. Under Section 194-IB of the I-T Act, you are liable to deduct TDS.

2. The rate of tax deducted u/s 194IB is 5%. It is to be deducted from total annual rent paid to the resident landlord.

3.Where the property is vacated during the year, the tax needs to be deducted on the last day of the tenancy.

4. No, you are not required to show it in your ITR. You have to file Form 26QC to do so.

You can log on to the official website of the I-T Department, and pay the tax using your details and your landlord's PAN card details. In case your landlord does not have a PAN Card, 20 per cent TDS will have to be deducted.

In case you fail to deduct TDS, you will end up paying a monthly penalty of one per cent on the outstanding amount. In case you fail to deposit the tax with the IT department within time, you will be liable to pay a monthly penalty of 1.5 per cent on the outstanding amount.

 

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA