The CBDT amended the rules relating to TDS as
“TDS on Rent u/s 194I” and inserted one more section “194IB” w.e.f 1st June
2017 to make provisions relating:
Deduction of TDS
@ 5% on rent payable by an Individual or a HUF Rs 50000/- or more per month to a resident for
a month or part of the month.
The points to be noted here are:-
1.
TDS @ 5% is
deductible from the rent paid or payable.
2.
The rate of TDS
shall be increased to 20% if the person receiving rent doesn't furnish the
details of his PAN, subject to maximum limit of amount of rent payable for the
month of march (last month of the previous year) or last month of tenancy as the case may be.
3.
The provisions of
section 203A shall not apply to a person required to deduct tax in accordance
with the provisions of this section.
4.
In a case where
the tax is required to be deducted as per the provisions of section 206AA, such
deduction shall not exceed the amount of rent payable for the month of March (last
month of the previous year) or the last month of the tenancy, as the case may
be.
Persons
required to deduct TDS under section 194IB
·
Individual and HUF who are not
required to get his books of accounts audited due
to the turnover or gross receipts not exceeding Rs 1 crore or Rs 50 Lakh in
case of business or profession respectively.
·
Individual and HUF who are
required to get his accounts tax audited under Section 44AB. These cover individual and HUF who are reporting profit lower
than the presumptive basis.
In other words only
individuals and HUF who are required to get his accounts audited due to
turnover or gross receipts higher than specified limits are not covered under
this section, all other individuals and HUFs are covered in this section.
Other
Points
·
Even salaried person or person
who doesn’t have any income is covered under section 194IB.
·
Other Individuals and HUF which
not covered under this section, company, partnership firm, AOP and BOI are
required to deducted TDS from rent under Section
194I
Difference between section
194I and section 194IB
Basis
|
Section 194I
|
Section 194IB
|
Applicability
|
– Every person paying rent (except individual & HUF)
– Individual & HUF if doing business and covered in tax audit in last year immediately preceding the financial year in which income by way of rent is credited or paid. |
Every Individual & HUF not covered in 194-I
|
Property Covered
|
Only Commercial property covered
|
Commercial and residential property both covered.
|
Applicable Threshold Limit
|
Rs. 1,80,000 Per annum
|
Rs. 50,000 per month or part of the month during financial year
|
TDS Rate
|
10%
|
5%
|
TAN requirement
|
TAN is required
|
TAN is not required. PAN is required.
|
Payment and Return
|
Monthly Payment and Quarterly Return in form 26Q for all
payments other than salary are covered in one form.
|
Payment and Return once in a year but multiple forms are to be
filed as per number of Agreement,
number of landlords.
|
The TDS deducted by tenants u/s 194IB shall be deposited through a
challan-cum-statement
in Form No.26QC electronically in accordance with the procedures,
formats and standards specified under sub-rule (5) within 30 days from the end date
of tenancy period or March 31 whichever is earlier.
The tenant would also be required to issue a Tax Withholding
Certificate, Form 16C, to the landlord, as a proof that taxes have been
deposited in his name. Form 16C, TDS Certificate To be provided within
15 days from the due date for furnishing Form 26QC.
How
Often Should one File Form 26QC?
According
to rule, Taxpayer/Tenant should furnish challan-cum-statement in Form 26QC
·
At the end
of the FY (in case the agreement period contains more than one FY and rent
has been paid/credited during the year).
At the end
of the month when the premise is vacated or the agreement is terminated ( in
case the agreement period falls in the same FY).
Example 1:
(Rent Agreement falling across two FY):-
Tenant Mr. A has
entered into a tenancy agreement with Landlord Mr. X for the period of 17
months from April 1, 2017 to August 31, 2018 @ rent of Rs. 60,000.
Explanation: – In this case, Mr. A should file Form
26QC twice i.e. firstly at the end of the FY 2017-18 (on March 31, 2018) and
secondly at the end of the tenancy period (on August 31, 2018). Following
values will be captured in the below fields:-
Particulars
|
At the end of FY 2017-18
|
At the end of tenancy
|
Period of Tenancy
|
12 Months
|
5 Months
|
Total Value of Rent Payable
|
Rs 7,20,000
|
Rs 3,00,000
|
Rent paid in last month
|
Rs 60,000
|
Rs 60,000
|
TDS amount @ 5%
|
Rs 36,000
|
Rs 15,000
|
Due date of filing form 26QC
|
On or before 30th April 2018
|
On or before 30th Sep 2018
|
TDS certificate in Form 16C
|
On or before 15th May 2018
|
On or before 15th Oct 2018
|
Note: If the
rent is increased during the financial year to cross the limit of Rs. 50,000/-,
the calculation relating to TDS shall remain the same as above since the liability to deduct TDS is determined
considering the amount of rent paid in the last month, and TDS is deducted on
the gross value of rent paid during the period. The following example shall
clarify the same:-
Example 2:
Mr. Z entered
into a tenancy agreement with Landlord Mr. D for the period of 36 months from
May 1, 2017 to April 30, 2020 @ rent of Rs. 35,000. The rent was increased to
Rs.55000/- with effect from 1st December 2017.
The calculation
relating to TDS for the FY 2017-18 will be done as follows:-
Particulars
|
At the end of FY 2017-18
|
Period of Tenancy
|
11 Months
|
Total Value of Rent Payable
|
Rs 4,65,000/-
|
Rent paid in last month
|
Rs 55,000
|
TDS amount @ 5%
|
Rs 23,250/-
(5% of 4,65,000/-)
|
Due date of filing form 26QC
|
On or before 30th April 2018
|
TDS certificate in Form 16C
|
On or before 15th May 2018
|
Example 3:
(Rent Agreement falling in same FY):-
Tenant Mr. B has
entered into a tenancy agreement with Landlord Mr. Y for the period of 6 months
from June 1, 2017 to November 30, 2017 @ rent of Rs. 70,000 for 6 months
Explanation: – In this case, Mr. B will have to file
Form 26QC only once i.e. at the end of tenancy period (on November 30, 2017).
Following values will be captured in the below fields:
Particulars
|
At the end of Tenancy
|
If Renewed with same landlord
with increase in rent with 10% or at same rent
|
Period of Tenancy
|
6 Months
|
10 Months
|
Total Value of Rent Payable
|
Rs 4,20,000/-
|
Rs 7,28,000/-
|
Rent paid in last month
|
Rs 70,000/-
|
Rs 70,000/- for 6 months and Rs.77000/- for 4 months.
|
TDS amount @ 5%
|
Rs 21,000/-
|
Rs 36,400/-
|
Due date of filing form 26QC
|
On or before 30th Dec, 2017
|
On or before 30th April, 2017
|
TDS certificate in Form 16C
|
On or before 14th Jan, 2018
|
On or before 15th May, 2018
|
Filing Multiple 26QC Forms
Form 26QC needs to be filed more than once in the following
situations:-
·
If a person vacate one house and
move to another and rent of both houses are more than Rs. 50,000 then Form 26QC
is to be made twice in a year for each property owner. In other words, Form 26QC
is to be filled by each tenant for unique tenant-landlord combination for
respective share. For example:-
·
In case of single tenant and
single landlord, only one form is require to be filled.
·
In case of single tenant and two
landlords, two form is required to be filled for respective shares.
·
In case of two tenant and two
landlords, four form is require to be filled for respective shares.
·
As deduction is required once a
year, so payment is also required to be deposited to Government only once a
year. However if tenant is require to file more than one form then separate
payment should be made for each form.
How to fill challan cum
statement in form 26QC
Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and then click on Form 26QC. The form will now get opened.
Please take care that this page also expires if remains inactive for some time.
Details required to fill form 26QC
·
PAN of landlord and tenant’s PAN
·
Address of both landlord and
tenant
·
Address of let out Property
·
Period of Tenancy
·
Total amount of rent payable
·
Rent paid or payable for the
month of March or the last month of tenancy
·
Interest or late fees payable
·
Date of tax deduction
·
Payment can be made using net banking at time
of filing form 26QC or can be made afterwards by using e-payment on subsequent date or by visiting any Authorized bank branches after filing form 26QC.
Interest and Penalties
Interest
Interest is chargeable on short payment/late payment
of TDS. There can be following scenarios:-
·
When TDS is not deducted
Interest at the rate of 1% per month or part
thereof, for the period from the date on which TDS is deductible to the
date on which TDS is actually deducted.
·
When TDS is deducted but
payment is made lately
Interest at the rate of 1.5% per month or part
thereof, for the period from the date on which TDS is actually deducted to the
date on which such TDS is actually paid.
Penalty
·
Late filing fee of Rs 200 per
day under section 234E
A penalty of Rs. 200 per day under section 234E is
levied for late filing of form 26QC. The total late filing fees should not
exceed the total amount of TDS which is require to be deducted.
·
Penalty ranging Rs 10,000 to Rs
1,00,000 under section 271H
If the TDS statement is not filed within one year from
the due date of furnishing of TDS return, then a minimum penalty of Rs 10,000
(which can go upto Rs 1,00,000) can be levied. The penalty under this section
will be in addition to the late filing fee of Rs 200 per day under section
234E.
Section 271H also cover cases of filing incorrect
TDS/TCS return such as furnishing incorrect details in the statement filed like
PAN, Challan and TDS Amount etc . Similarly minimum penalty of Rs 10,000 (which
can go upto Rs 1,00,0000) can be levied.
·
Penalty on late issuing of TDS
Certificate
Penalty of Rs 100 per day shall be payable for any
delay in issuing TDS certificate. The total late issuing fees should not exceed
the total amount of TDS which is require to be deducted.
FAQs
What is TDS on rent paid :
Newly inserted section 194 IB effective
from 01.06.17 provides that Tenant of a property making monthly rent payment
exceeding ₹ 50, 000 per month or part of month is required to deduct tax at the rate of 5%
from the rent payable to a resident landlord.
Who is liable for TDS under Section 194 IB
The tenant of the property being an
individual or a HUF (not liable to audit u/s 44AB) would have to deduct the TDS
and deposit the same in form 26QC under Section 194IB. The Individual or HUF
subjected to Tax audit are covered under Section 194 I.
What is the due date of payment
The due date of payment of TDS on rent is thirty days from the
end of the month in which the deduction is made.
The deduction is to be made from payment of last month rent in
March if tenancy continues and last month of the tenancy period if agreement
ends with in the financial period.
Example: If a taxpayer has made payment of rent in the
month of December, then corresponding TDS should be deposited on or before
thirty days i.e. January 30th.
How can the form 26QC filed and payment can be made
The Tenant of the property has to furnish information regarding
the transaction, online on the TIN website i.e. www.tin-nsdl.com in Form 26QC and after
successfully submitting the same can make payment in the following manner :
i) Either make the payment online (through e-tax payment
option) immediately; Or
ii) Make the payment subsequently through e-tax payment option
either themselves through e banking or through bank branches. However, such
bank branches will make e-payment without digitization of any challan. The bank
will get the challan details from the online form filled on TIN website(www.tin-nsdl.com)
Whether printout can be taken later after filing 26QC & TDS can be paid later.
Yes. The deductor ( tenant) can
opt “E-tax on subsequent date” on the TIN website. On entering the details as
per the acknowledgment slip, deductor will be provided options to Print the
Form 26QC.
What is form 16C and how it can be provided to landlord
Form 16C is the TDS certificate to be
issued by the deductor (Tenant of property) to the deductee (Landlord of
property) for the amount of the tax deducted and deposited as TDS on rent under
section 194-IB.
Form 16C will be available for download
from the website of Centralized Processing Cell of TDS (CPC-TDS), www.tdscpc.gov.in after log in and entering the profile of
the tenant and landlord.
Compiled
by Ms Saino Susan Varghese Article
Assistant at Sandeep Ahuja & Co
