I Am Paying Monthly Rent More Than Rs 50,000. Should I Deduct Tds Monthly Or Once Yearly?

I americium paying a monthly location rent of much than Rs 50,000. As per Section 194-IB of nan Income Tax Act, I understand that TDS is applicable. Should I deduct and deposit TDS each month, aliases tin it beryllium done erstwhile astatine nan extremity of nan financial twelvemonth successful a azygous payment?

Advice by CA Niyati Shah, Vertical Head - Personal Tax astatine 1 Finance

Paying rent for your location is simply a regular expense, but if it amounts to much than Rs 50,000 per month, nan Income Tax Department expects you to play a mini portion successful taxation compliance - by deducting TDS (Tax Deducted astatine Source) nether Section 194-IB of nan Income Tax Act, 1961. But earlier you panic astir monthly paperwork, here’s nan bully news - you don’t person to deduct and deposit TDS each month.

Under Section 194-IB, individuals aliases HUFs (not liable for taxation audit) are required to deduct 2% TDS only “once” - astatine nan clip of paying nan rent for March aliases erstwhile vacating nan property, whichever is earlier. So, moreover if your rent crosses nan ₹6 lakh per annum threshold, you’re only making a azygous conclusion and deposit per year, not 12.

The process is reasonably straightforward. You’ll request to:

> Deduct 2% from nan full rent for nan year

> Fill retired Form 26QC (a challan-cum-statement) wrong 30 days of deduction

> Issue Form 16C (TDS certificate) to your landlord wrong 15 days aft that

But missing nan deadline could consequence successful penalties and liking - truthful it’s wise to people your almanac and get this done connected time.

Section 194-IB is simply a smart move by nan authorities to seizure rental income successful nan taxation net. It’s a one-time yearly compliance - simple, effective, and wholly manageable.

Renting a high-value location shouldn’t mean high-stress taxation compliance. With a small awareness, you tin enactment connected nan correct broadside of nan rule - without breaking a sweat.

What is Section 194-IB?
Section 194-IB was introduced to bring high-value rental transactions nether nan taxation net. It mandates individuals aliases Hindu Undivided Families (HUFs)—who are not liable to taxation audit nether Section 44AB—to deduct taxation astatine root (TDS) erstwhile they salary rent to a resident landlord.

Who must deduct TDS?
Any individual aliases HUF (not covered nether taxation audit) paying rent exceeding Rs 50,000 per period to a resident landlord.

When is it applicable?
TDS must beryllium deducted astatine nan clip of costs aliases credit, whichever is earlier.

Who is exempt?

Landlords who are non-residents (covered nether Section 195 instead).

Tenants paying monthly rent ≤ Rs 50,000.

> Key Provisions

Provision                Details

Threshold limit         Monthly rent exceeds ₹50,000
Rate of TDS             5% connected nan full rent amount
PAN of landlord
mandatory                If PAN not provided, TDS must beryllium deducted astatine 20%
TDS magnitude limit     TDS capped astatine past month’s rent
Time of deduction    Once annually astatine clip of credit/payment for March aliases termination
Form for payment    Form 26QC – Challan-cum-statement revenge wrong 30 days of deduction
TDS certificate         Form 16C to beryllium issued to landlord wrong 15 days of Form 26QC filing

For example
Suppose you (an individual salaried employee) rent an flat successful Mumbai for Rs 60,000/month:

Total rent for nan financial twelvemonth = Rs 7,20,000

TDS applicable = 5% of Rs 7,20,000 = Rs 36,000

You’ll deduct Rs 36,000 from nan past month's rent, aliases divided crossed arsenic agreed.

File Form 26QC and rumor Form 16C to your landlord.