SECTION 194-IB TDS ON RENT PAID BY INDIVIUAL/HUF WHOSE BOOKS ARE NOT AUDITED AS PER SEC 44AB

SECTION 194-IB TDS ON RENT PAID BY INDIVIUAL/HUF WHOSE BOOKS ARE NOT AUDITED AS PER SEC 44AB

According to sec 194-IB of Income Tax act 1961, Tenant is required to deduct TDS on rent paid if following conditions are satisfied:

1. The tenant is either an indiviual/HUF whose accounts are not audited.
2. The Landlord is Resident.
3. The tenant is paying to Resident Landlord any income by way of Rent.
4. The payment of rent exceeds Rs. 50000 PM or part of the month during previous year.
5. Rate of TDS is 5%

TIME OF TDS DEDUCTION

At the time of credit of rent for the last month of the previous year or last month of a tenancy (if in case during the year the property gets vacated); or

At the time of payment in cash or cheque or draft or by any other mode.

WHICHEVER IS EARLIER DATE

MEANING OF RENT FOR THIS SECTION

Rent means any payment made under any tenancy or lease or sub lease agreement or any arrangent for the use of any land/building or both.

PERIOD OF TDS DEDUCTION

Only once in a Year.

NOTE:

1. No requirement of TAN under section 203A
2. The tenant is required to deposit TDS by filing Challan-cum-Statement in Form 26QC.
3. The tenant is liable to make a deposit of the deducted TDS within a period of 30 days from the end of the month in which TDS is deducted.
4. TDS Certificate shall also be issue within 15 days of filling challan for payment.

EXAMPLE:

Mr. A (landlord) made an rent agreement with Mr. B (tenant) for 12 months on date 01.10.2021 rent of Rs. 55000 PM.

For F.Y. 21-22 Oct 21 - Mar 22 (6 months) - 55000*6 = 330000

TDS will br deducted on last month of FY (31 march 2022 ) @ 5% on 330000 which is 16500 Rs. and TDS amount shall be deposited with in 30 days from the end of month in which TDS is deducted ( which is 30 april 2022).

TDS certificate will issued till 15 may 2022.

Same calculation will be made for remaining 6 months which belongs to FY 22-23.

IF TDS NOT DEDUCTED ON RENT THEN:

If tenant fails to deduct TDS under this section then, the tenant would be liable to pay late fee @ 1% per month from the date the TDS was required to be deducted till the date the TDS actually deducted.

EXAMPLLE: Refer above 

Date  of TDS deducted is 31 march 2022 but fail to deduct  and tenant deducted on 30 april 2022 then ,

TDS amount which is 16500 @ 1% for 2 months, Rs. 165*2 = 330.

HERE, march and april both month will consider because TDS belongs to march month and deducted on april month.

SECTION 206AB WITH RELEVANCE TO FINANCE BILL 2022

A new section was introduced in finance bill 2021 which is 206AB says that deduction or collection of tax at source at higher rates if such person (whose tds deducted or collection of tcs) did not filed the income tax return.

FINANCE BILL 2022  - Provision of  section 206AA is not applicable in this section 194-IB. .

Disclaimer: Taxwink is not responsible for the correctness and accuracy of the above information. These are merely the opinion of the author therefore, Taxwink is not responsible for any loss or damage caused to any person due to use of the above information.