Query on tds and tec for tenant of nri owner

Dear Sir,

TDS needs to be 31.2% of the rent, unless the NRI landlord furnishes a certificate stating that his total income in India is estimated to fall below the tax exemption limit. There is no lower limit for TDS deduction. For example, even if the rent is₹5,000 per month, the tenant will have to deduct TDS.

Remember that it is the tenant’s duty to ascertain if the landlord is an NRI.

The tenant (You) first needs to obtain a tax deduction account number (TAN). This can be done online through the NSDL website. Once the TAN number is issued, the tenant can deduct tax every month and pay it online. For example, in case the rent is ₹5,000, the tenant will have to deduct ₹1,570 per month (31.2% of ₹5,000). The balance can be paid to the landlord.

TDS needs to be paid by the tenant by the seventh of each calendar month, following the month in which tax is deducted. For example, if you pay rent and deduct tax on 5 June, TDS must be deposited with the government by 7 July. It is important that you pay TDS that you have deducted from the rent, well in time. Failure to do so can attract prosecution under Section 276B of the Income-tax Act, 1961, leading to imprisonment of three months to seven years.

Remember that failing to deduct TDS from an NRI landlord can also attract a penalty equal to tax not deducted under Section 271C of the Act, but not prosecution.

- Rate of TDS is 31.20%.

- You need to obtain lower deduction certificate from the jurisdictional AO.

- You have to obtain TAN and pay TDS on monthly basis. File TDS return on quarterly basis.

- File Form 15CA and 15CB.

Dear Sir,

Section 197 of the Income Tax Act, 1961 provides for the facility of NIL deduction of tax at deduction at a Lower rate of tax. To avail of this benefit, the assessee whose TDS is likely to be deducted on certain receipts should make an application before the TDS Assessing Officer who has a jurisdiction over his/ her/ its case. The deductee concerned may apply for a certificate for Nil or lower deduction of TDS on their receipts in Form No 13.

Once the certificate received by deductee, he/she/it can submit to Deductor to deduct the TDS at NIL rate or lower rate.

Deductor has to give this certificate details while filing TDS return and has to validate before filing. 197 certificate should be of 10 digit alpha & numeric number. Ex.1234AAAA45A1.

Hello,

TDS would be deducted at 31.2 %. TDS registration(TAN) would be required. TDS would be deducted and deposited to the government on a monthly basis and TDS return would be submitted quarterly.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

NRI owner needs to obtain a lower/nil deduction certificate form the department in case his total income in India is estimated to be below the basic tax exemption limit.

You also need to comply with Form 15CA.

Thing you are telling would be TRC and not TEC it helps you in determining benefits available to the landlord under DTAA.

If your land lord provides lower deduction certificate or Nil TDS deduction certificate from his Assessing officer then you dont need to deduct any TDS.

If he doesnt provide any such thing then you need to apply for TAN number and deduct TDS @31.2% and deposit TDS every month with government and file return every quarter under 27Q and you also need to file Form 15CA.

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

Thank you.

Hi

The NRI owner needs to obtain a No Deduction certificate from his AO. He can apply for this certificate online through income tax portal. The AO shall issue No/NIL deduction certificate if the total income of the NRI is below taxable limit.

If the owner provides you this certificate, no need to deduct TDS.

However, if certificate is not obtained, you need to apply for TAN, deduct TDS and pay it to the government. Also, TDS returns shall have to be filed.