Section 194IB of Income Tax Act, 1961

Section 194IB of the Income Tax Act, 1961 pertains to the TDS (Tax Deducted at Source) on rent. It mandates that an individual or Hindu Undivided Family (HUF) who receives rent exceeding ₹50,000 per month (or part of month) must deduct TDS.

Who is required to deduct TDS under section 194IB

As per section 194IB of the Income Tax Act, 1961, individuals and Hindu Undivided Families (HUFs) who receive rent exceeding ₹50,000 per month (or part of month) are required to deduct TDS at the rate of 5% before making payment to the landlord.

Important Points To Note

• As per section 194IB, the TDS on rent must be deducted at the time of credit of rent or at the time of payment (whichever is earlier). The TDS is to be deducted on the rent for the last month of the previous year or the last month of tenancy, if the property is vacated during the year.
• As per section 194IB of the Income Tax Act, 1961, the provisions of section 203A do not apply to a person required to deduct TDS on rent under this section. Section 203A pertains to the obligation of a person to deduct tax at source to collect tax and ensure compliance with tax laws. However, for TDS on rent, the provisions of section 203A do not apply, as they are already covered under section 194IB.
• In case of TDS on rent, if the provisions of section 206AA also apply, then the TDS deducted cannot exceed the amount of rent payable for the last month of the previous year or the last month of tenancy, whichever is applicable. Section 206AA pertains to the requirement of quoting PAN (Permanent Account Number) for certain specified transactions and higher TDS rate in case of non-compliance. In such cases, the TDS rate specified under section 206AA would be applicable but the TDS amount cannot exceed the rent payable for the relevant period.