Section 194I of the Income Tax Act, 1961 deals with the deduction of tax at source (TDS) on rent paid to a resident. This section applies to all taxpayers, including individuals, HUFs, firms, companies, and other entities.
According to this section, if the total rent paid or payable during a financial year exceeds Rs. 2,40,000, the tenant must deduct TDS at the rate of 2% on the amount of rent paid on the hiring of plant & machinery or other than Plant & machinery 10%. If the landlord does not provide their PAN, the TDS rate will be 20%.
The TDS on rent is deducted at the time of credit of rent income or payment, whichever is earlier. The payment date is either the actual payment date or the date of issue of payment instrument, whichever is earlier.
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