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TDS ON RENT ABOVE RS.50000

21 June 2020

My client is paying rent more than Rs.50000 PM. For FY. 19-20
till now he has not deducted tax. if he deducts now how much interest and late fee to be paid. monthly Rent rs. 55000.

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4 Replies

KRISSHNAN KP (4215 Points)
Replied 21 June 2020

Section 194I

1 Like

Bhavin Shah (Chartered Accountant) (821 Points)
Replied 21 June 2020

Https://www.indiafilings.com/learn/section-194ib-tds-on-rent-of-property/

Kindly refer the following link to get a better understanding... I hope your query gets answered

David (article Assistant) (1621 Points)
Replied 21 June 2020

Section is 194IB. Here in this case if the where the house owner has furnished the return of income and the rent is taken into account such sum for computing income in his return and he paid the tax due on such sum, then there will be no issue.
.. You have to obtain a declaration in Form 26A from the house owner. Then no need to file the Tds returns... However you have to pay interest..

Ajay (CA Job) (512 Points)
Replied 21 June 2020

Dear Vijay

First of all, I assume that your client‘s total sales/gross receipts, if any, does not exceed the limits prescribed for tax audit under Sec.44AB for the FY 2018-19 and his landlord is a resident payee during the FY 2019-20. If so, Section 194-IB is applicable in your case, else Section 194-I.

The below provision are as per Sec.194-IB of the Income Tax Act, 1961 read with The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (hereinafter referred to as “the Ordinance):

Your client was supposed to deduct TDS from the rent paid for the month of March 2020 (assuming the tenancy has not terminated before March 2020). The rate is 5% which is to be applied on the whole rent amount paid during FY 2019-20. Note the revised rate of 3.75% under Section 194-IB is applicable only for any amount paid/credited from 14^th May, 2020 as per the PIB Notification dated 13^th May, 2020 released by the Ministry of Finance.
Your client’s landlord must provide his PAN to the former. If the landlord fails to do so, rate of TDS becomes 20% u/s 206AA. However, the maximum TDS cannot exceed the rent payable for the last month, which is Rs.55,000 in your case. (As a side note, there is no relief in such cases as per Point 4 of the PIB Notification dated 13^th May, 2020 released by the Ministry of Finance even for any exigible payments/credits made on or after 14^th May, 2020.)
As per the Ordinance, there is no extension in the due dates for the deposit of TDS using the Challan-cum-Statement in Form No.26QC as such, which remains at 30^th April, 2020 in your case.
However, the due date of filing of return of TDS in Form No.26QC stands extended to 30^th June, 2020 (from the original due date of 30^th April, 2020 in your case) as per Sec.3(1)(b) of the Oridnance.
Also, the due date for issue of TDS certificate in Form No.16C by your client to his landlord stands extended from 15^th May, 2020 (being original due date) to 30^th, June, 2020.
Now, coming to interest under Section 201(1A) stands revised @ 0.75% per month or part of a month for “the period of delay” as per Sec.3(2)(a) of the Ordinance. “The period of delay” as per the Explanation to Sec.3(2) is the period between the due date and the date on which the amount has been paid.

So, assuming in your case, your client deposit the TDS on 22^nd June, 2020, the interest may be computed as follows:

Sl. No.	Particulars	Rs.	Rs.	Remarks
1.	Total Rent paid during FY 2019-20	55,000 x 12	6,60,000	Assuming the tenancy for whole year
2.	TDS @ 5%	6,60,000 x 5%	33,000
3.	Rate of Interest @ 0.75%	33,000 x .75% x 3	743	For April, May & June 2020. (April is to be considered as “The period of delay” starts from the “due date” and not from the day after the due date)(Also, see the note below the table)

Note: In normal TDS provisions, there are 2 rates of interest, that is, @ 1% for the period starting from the date on which TDS was “deductible” to date “actually deducted” and @ 1.5% for the period starting from the date TDS was “actually deducted” to the “date of deposit” of TDS. So, the interest calculation would have commenced from the date on which TDS was deductible, that is, from March 2020 as per normal provisions. But as per the Explanation to Sec.3(2) of the Ordinance, interest starts only from the “due date” of deposit of TDS.

Late Fee under Section 234E – If your client files the TDS return on or before 30^th June, 2020, the late fee will not be charges as per Sec. 3(2) of the Ordinance which talks about interest on any “tax or levy”. So, late fee will be leviable @ Rs.200 per day, only in case TDS return is filed on or after 1^st July, 2020.
No penalty or prosecution for the “period of delay” as per Sec.3(2)(b) of the Ordinance.
It is pertinent to note that the due for filing of return as well as for issue of TDS certificate is 30^th June, 2020. So it would be important for you to advise your client to remit the TDS as soon as possible and immediately file TDS Return so that he/she can generate the TDS certificate on or before the 30^th June, 2020. Also, it may take a few days to get the TDS deposit reflected in the NSDL Database. Else, this would entail further hardship to your client. This problem arises due to the fact that multiple compliances are expected on the date of 30^th June, 2020 and hence immediate action is recommended.
Note that the Ordinance was issued dated 31^st March , 2020 considering the lockdown decided then. The Ordinance reserves the right of the Central Govt to change the “extended date” of 30^th June, 2020 by issuing notification. So, we cannot be sure if there will be any further extension available as of now. However, till date, no such extension has been allowed.
The above provisions will hold true even if TDS is deductible under Section 194-I except for the following major changes:
1. The rate of TDS would be 10% (rent for land or building).
2. TDS Return will be in Form No.26Q
3. TDS Certificate will be issued in Form No. 16A.
4. The threshold limit would be Rs.2,40,000 upto which payments maybe made without TDS.

All other relaxations under the Ordinance towards filing of return, interest, levy etc. will be applicable in this case too.

I give here a good article for reference: https://www.taxcorner.co.in/2020/04/no-extension-of-due-date-of-tds-payment-for-march-2020-onwards-amid-covid-19.H T M L

Kindly recheck with a professional before acting on the above.

Regards

Ajay