TDS on Personal Rent u/s 194-IB

Applicability

• For those small business which are not liable for tax audit u/s 44ab
• Personal rent of house for salaried individual claiming HRA

Rate of TDS

• 5% exceeding 50,000 per month

When is to be deducted?

• At the end of financial year OR
• At the end of agreement between landlord and tenant

Remember TDS is to be deducted only one time in a year

Let me explain you with the help of examples

(1) Suppose Mr X, a tenant pays Rs. 60,000 per month to Mr Y, a landlord. Whether TDS to be deducted?

Ans. Yes it is to be deducted since it exceeded 50,000 per month.

Amount of rent = 60000*12 = 7,20,000
Amount of TDS = 7,20,000*5% = 36,000
Rent payable to landlord during March = (60000-36000) = 24,000

For the rest of the month whole 60,000 will be paid to landlord

(2) Suppose rent agreement between landlord and tenant made for the period April to July. Amount Rs.60,000

Since amount exceeded 50000 and tenancy agreement made for 4 months therefore TDS to be deducted @5%

Amount of rent for 4 months = 60,000*4 = 2,40,000
Amount of TDS = 2,40,000*5% = 12,000

Amount payable to landlord at the end of tenancy agreement = (60,000-12,000) = 48,000

For the rest of the month whole 60,000 will be paid to landlord

Also PAN of Deductor is required Not TAN.