TDS under section 194IB & form 26QC

TDS is to be deposited every month by Form 26QC which  is a challan cum return statement. The Due date of filing Form 26QC is within 30 days from the end of month in which the tax deduction is made

If advance rent is paid TDS will have to be deposited on total amount. Rate of TDS is 5%.

- Applicability of Section 194-IB - Section 194-IB is applicable to Individual or HUF responsible for paying to a RESIDENT  any income by way of rent exceeding Rs. 50,000 for month or part of a month, shall deduct an amount equal to 5% of such rent. It is not applicable to individeual or HUF whose total sales, gross receipts or turnover from business or profession carried on by him exceeds (Rs. 1 crore in case of business or Rs. 50 lacs in case of profession) during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid.

- Point of taxation (i.e. when to deduct TDS) - TDS shall be deducted at the time of credit of rent for the last month of the previous year or the last month of the tenancy, if the property is vacated during the year. 

Points of consideration u/s 194-IB

1. Firstly check whether landlord is resident or non-resident. If he is resident, deduct TDS u/s 194-IB, if he is non-resident TDS would be deducted u/s 195.

2. Secondly check applicablity of section 206AA or section 206AB.

3. Thirdly ensure no. of co-owners in the property. If rent is divided among co-owners then you need to file Form 26QC for each co-owner in respect of their rent share.

4. If the rent agreement covers two financial years then Form 26QC should be filed twice i.e. first at the end of  financial year and secondly at the end of the tenancy agreement.

5. Generate Form 16C timely and issue to the landlord.

- No need to deduct TDS every month in advance. Deduct TDS in the month of March only.   

- TDS rate is 5%

- In you case rent agreement covers more than one financial year (i.e. FY 2021-22 and 2022-23)

- If TDS is already deducted by you then it should be deposited within 30 days from the end of the month in which deduction was made. Delay in filing of Form 26QC attracts late fees of Rs. 200 per day u/s 234E.

For detailed discussion, you may opt for phone consultation.

As per the provision of 194IB you can deposit TDS on the whole year rent in March month of the year and then can generate 206QC accordingly

Only once payment required in March

Its only applicable on actual rent paid for period