Any individual or a Hindu divided family other than the person referred to the second provision to section 194-I, who is responsible for furnishing to the resident any income through the rent of more than Rs 50000 for a month or a section of the month in the preceding year, then the amount cut is equivalent to 5% of the income as a tax.
The income tax said to in subsection 1 will be deducted on the income during the time of credit of rent, in the last month of the last year or the previous month of tenure, if for the year the property is vacated as it might be for some cases in payees account or during payment time as cash or cheque, etc whichever is faster. The prerequisites of section 203A will unable to apply to an individual needed to deduct tax as within the stipulations of this section.
Latest Update
- Budget 2024 reduced the TDS rate under section 194-IB from 5% to 2% for rent payments made by individuals or HUFs, effective from October 1, 2024.
Under section 206AA in which the tax is needed to get cut down, these cutdowns will not be more than the amount of the rent which is taxable for the last month of the preceding year or the last month of which the tenant is to be taken
Description: the concern of the section rent signifies the payment, in whatever way it is named under any lease, sub-lease, tenancy, or any other agreement so for the utilization of the land or building.
Who is Competent to Tax Deduct Under Section 194IB?
Any person, whether an individual or a Hindu undivided family (not covered under section 194I)is urged to pay to the resident any income through the rent of more than Rs 50000 for the month while in the preceding year shall deduct income tax thereon at the rates in force.
A rent signifies the payment in whatever way it is named beneath any lease sublease, tenancy, or another regime for the land utilization or building. The person whose turnover is more than Rs 1 crore or Rs. 50 Lakhs, the TDS under income tax section 194IB is also expected to be deducted by the person covered u/s 44AD and 44AE.
Deduction of TDS on Property Rent Under Section 194IB Applicability?
During the credit time of rent, the income tax concerned the above will be cut down on the income for the last month of the preceding year or to the tenant month, if the property is vacated in the year according to the case to the taxpayer account during the payment time in cash or cheque or through the other payment methods whichever is faster.
5% TDS Rate Under Section 194IB
Section 194-IB specified that tax with a 5% rate (3.75% w.e.f. 14.05.2020 to 31.03.2021) needs to be subtracted through the Tenant, Payer, or Lessee during the time of furnishing the payment of rent to, Lesser, Landlord or Payee. The tax deducted is to be furnished to the government’s account online through any of the authorized bank branches.
Section 203A is concerned with the need to obtain TAN No. must not be applied to the person needing to cut tax as per the section. If for the event the tax needs to get cut according to section 206AA then this deduction will not be more than the rent amount furnished for the last month of the last year or the tenant month.
Other Features:
- There is a need to furnish the Challan-cum-statement in Form No. 26QC
- In Form 16C TDS certificate needs to get circulated through the individual subtracting tax in the assigned last dates.
General Queries Related to TDS Section 194IB
Q.1 – Under section 194IB what does the term TDS mean?
Section 194IB of the Income Tax Act, 1961 needs the individual or HUF who is not needed to get their accounts audited to cut out the TDS for the rent amount which is more than Rs 50K per month or in the part thereof
Q.2 – What is the privileged limit for TDS on the rent?
Under section 194-IB of the Income Tax Act, 1961 the privileged limit for TDS up on the rent is Rs 50K per month
Q.3 – In Form 26QC what is the duration of the tenancy?
In the 30 days duration, the Form 26 QC is required to be furnished from the finish of the month where the TDS has been cut down
Q.4 – what will be executed if the TDS has not been cut down on the rent?
Under section 194-IB If the tenant is needed to cut down the TDS but refuses to deduct this then the tenant will have to pay the late fee of @1% per month since then TDS is needed to be cut down till the date the TDS actually gets cut down
Q.5 – What is the method to compute the TDS on the rent with an illustration?
Let us say that Mr. X furnished Rs 80K per month for 12 months to Mr. Y as rent then the TDS according to the plan of the section 194-IB will be cut down is been explained below:
Total rent furnished in the year – INR 80,000 * 12 months = INR 9,60,000
TDS deductible – INR 9,60,000 * 5% = INR 48,000
TDS deductible – INR 9,60,000 * 5% = INR 48,000
Rent payable for the end of the month post to the TDS deduction = INR 80,000 & INR 48,000 = INR 32,000
