sec 194IB

A new section 194IB has been introduced from 01st June 2017. This section  requires certain individuals or HUF to deduct TDS on rent paid for the use of any land or building or both.

Persons required to deduct TDS under Section 194IB

• Individual and HUF who are not required to get his books of accounts audited under section 44AB due to the turnover or gross receipts not exceeding Rs 1 crore or Rs 50 Lakh in case of business or profession respectively.
• Individual and HUF who are required to get his accounts audited under Points (c), (d) or (e) of section 44AB. These cover individual and HUF who are reporting profit lower than the presumptive basis.

In other words only individuals and HUF who are required to get his accounts audited due to turnover or gross receipts higher than specified limits are not covered under this section, all other individuals and HUFs are covered in this section.

Other Points

• Even salaried person or person who doesn’t have any income are covered under section 194IB.
• Other Individuals and HUF which not covered under this section, company, partnership firm, AOP and BOI are required to deducted TDS from rent under section 194I.

Payment Covered

Payment of rent to a resident landlord for use of any land or building or both exceeding Rs. 50,000 per month is liable for tax deduction.

Other Points

• Payment made under lease, sub lease, tenancy or any other agreement or arrangements for the use of any land or building or both are also covered under this section.
• Refundable security deposit made to landlord at the time of taking property on rent by tenant should not be covered under this section.
• Rent payment for plant and machinery, equipments, furniture and fittings etc are covered under section 194I
• If payment is made to non-resident then TDS is deductible under section 195.

Time of Deduction

TDS is to be deducted only at one time in a year and not in every month. TDS is to be deducted at earlier from the following:-

• Time of credit of rent to the account of payee for the month of March or the last month of tenancy, if property is vacated during the year as the case may be.
• Time of payment of rent to payee for the month of March or the last month of tenancy , if property is vacated during the year as the case may be.

TDS Rate

TDS is deductible at the rate of 5% of the rent paid or payable.

However if the person receiving rent doesn’t furnish his PAN then TDS is deductible at the rate of 20% subject to maximum limit of amount of rent payable for the month of march or last month of tenancy as the case may be.

No requirement of TAN number

TAN number is not required by such person to deduct and deposit TDS to Government.

Due Date of Payment

Payment is to be made by tenant using Form 26QC which is a challan cum statement within 30 days from the end of month in which deduction is made. For example if deduction is made in month of March then payment is to be made till 30th of April.

Other Points

• If a person vacate one house and move to another and rent of both houses are more than Rs. 50,000 then Form 26QC is to be made twice in a year for each property owner. In other words, Form 26QC is to be filled by each tenant for unique tenant-landlord combination for respective share. For example:-
• In case of single tenant and single landlord, only one form is require to be filled.
• In case of single tenant and two landlords, two form is required to be filled for respective shares.
• In case of two tenant and two landlords, four form is require to be filled for respective shares.
• As deduction is required once a year, so payment is also required to be deposited to Government only once a year. However if tenant is require to file more than one form then separate payment should be made for each form.

How to Fill Challan cum Statement in Form 26QC

Rule 31A of Income tax rules states that a challan cum statement in form 26QC is to be filed within 30 days from the end of month in which deduction under this section is made.

Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and then click on Form 26QC. The form will now get opened. Please take care that this page also expires if remains inactive for some time.

Details required to fill form 26QC

• PAN of landlord and tenant’s PAN
• Address of both landlord and tenant
• Address of let out Property
• Period of Tenancy
• Total amount of rent payable
• Rent paid or payable for the month of March or the last month of tenancy
• Interest or late fees payable
• Date of tax deduction
• Payment can be made using net banking at time of filing form 26QC or can be made afterwards by using e-payment on subsequent date or by visiting any Authorized bank branches after filing form 26QC.

TDS Certificate in Form 16C

TDS certificate is to be given by the tenant to landlord in Form 16C which is generated from the TRACES website. Such certificate is to be given to tenant within 15 days from the due date of submitting Form 26QC, so normally such date will be 45 days from the end of month in which deduction is made. If due date of form 26QC is extended than 15 days from such extended date.

Also landlord can verify details of taxes deducted by tenant in his form 26AS.