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Section 194IB - The most important yet unnoticed section of Income Tax Act 1961

CA ANURAG 
on 25 March 2021

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Today I will talk to you through one of the most important yet which is not that much discussed section. Section 194IB of income tax act related to TDS. Many people are not aware of this section as they confuse it with section 194I, So lets talk about some of the pertinent points relating to it.

1. Whom is it applicable?

Individual/HUF who are not liable to audit u/s 44AB.

2. When is it applicable?

When Individual/HUF pay rent which is more than Rs.50,000/- per month.

3. When is it to be deducted?

If property is to vacated then it should be paid before during the year, otherwise it is be paid during the last month of the year.

It is paid on due or payment whichever is earlier basis.

Section 194IB - The most important yet unnoticed section of Income Tax Act 1961

4. What is the rate of TDS?

The rate of TDS is 5%. However if PAN of the landlord is not available then rate will be 20%.

5. How is it to be paid?

Form 26QC which is a challan cum statement is used to pay this. TAN number is not necessary for this.

 

6. What is the method of payment?

Click https://www.tin-nsdl.com/

Now under services, select TDS on rent on property.

"E- payment of taxes" will appear. Fill all the details relating to PAN number, date of deduction, amount paid and submit the form.

 

7. Other important points:

  • This TDS is to be deducted and paid only once during the year.
  • There is no requirement of filling any TDS return quarterly for it.

So, always take into consideration this section before you deduct or file TDS relating to individual/HUF who are covered under Tax Audit.


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