• Forgot to deduct tds on rent

Hi,

I paid rent of more than Rs 50000 for a self-occupied flat from March 2018 to September 2020. I did not deduct TDS on the rent. I did not file form 26QC anytime during this period. Rent was paid through cheques or electronically during this period.

What can be the maximum penalty that I may be asked to pay. What can I do now to avoid penalities in future from Income Tax department?
Asked 3 years ago in Income Tax

Hi,

 

There are two things which can cost you. one is interest and the second is penalty.

 

1. Interest

 

Interest in case of non-deduction of TDS – Interest shall be levied @1% for every month or part of the month from the date on which TDS was deductible till the date on which TDS actually deducted.

Thus, you should deduct and deposit the tds ASAP. Post that file TDS return as well.

 

2. Penalty

 

Maximum penalty for non deduction can be equivalent to the amount of TDS. However, its not automatic and tax officer has to initiate the penalty. If you voluntary pay the tds now and comply with the provisions, chances are that penalty should not be levied.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Hi,

- Default period covers four financial years i.e. F.Y. 2017-18, 2018-19,2019-20 and partly F.Y. 2020-21. If the recipient of rent has already paid tax on the rental income for 2017-18, 2018-19 & 2019-20 then you will not be treated as assessee in default u/s 201 and there is no need to file Form 26QC for the above period. Hence no liability for interest and penalty for the above period. You are required to obtain certificate from CA in form 26A and upload it electronically.

 

- For F.Y. 2020-21, you are liable to pay TDS in March 2021.

 

To discuss in detail, feel free to contact me.

 

Vivek Kumar Arora
CA, Delhi
4825 Answers
1031 Consultations

5.0 on 5.0

You should deduct TDS from Future payable rent and should pay the same to the government along with interest on the same.

 

Thanks

Brijendra Tripathi
CA, Lucknow
143 Answers
3 Consultations

5.0 on 5.0

Hi

 

The penalty for not deducting TDS and not depositing the tax with the government is 1 per cent and 1.5 per cent, respectively, per month. ... “Since the tenant is deducting TDS, the landlord will have to disclose rental income. If the TDS is not deduced, the landlord cannot take credit and he will have to pay tax

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Maximum penalty can be interest on such amount which can be 1% per month.

You must deduct TDS and file TDS return.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement. You can even book phone consultation for further personal assistance.

Thank you.

 

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

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