Section 194IB specify
- According to Section 194IB, it is mandatory for any person, i.e. individuals / HUF not liable to audit u/s 44AB, to deduct taxes for a rent paid to a resident, exceeding Rs 50,000 per month.
- According to the section, rent means a payment made by a payee under a tenancy, lease, sub-lease, or any other arrangement made for assets such
- Land
- Land including a factory building
- Building including a factory building
- Machinery
- Furniture
- Equipment
- Plant
- Fittings
- The payee may or may not own the assets mentioned above
Point of Deduction of TDS
TDS must be deducted, by the individuals or HUFs, earlier of:
- At the time of credit of rent (for the last month in the previous year or the last month of the tenancy if the property is vacated before during the year), or
- At the time of payment (via cash or cheque or draft or any other mode).
Rate of TDS under section 194IB
- The tax rate applicable is 5%, in case the rent payment exceeds Rs 50,000 and the landlord’s PAN is provided.
- In case PAN is not available, then a TDS of 20% will be applicable.
Online TDS Payment Procedure under 194IB
Step 1: Open the URL, https://www.tin-nsdl.com/.
Step 2: Choose the option ‘TDS on Rent of Property’. A new window appears. Click on ‘Online form for furnishing TDS on property (Form 26QC)’.
Step 3: A page with the headline ‘e-Payment of Taxes’ will appear. Fill in the necessary details such as property details, tax deposit details, the amount paid, date of tax deduction, and landlord and tenant details.
Step 4: You can either pay the tax online immediately or visit an authorised bank for the same.
Step 5: Note the acknowledgement number of the payment for future references. You can download Form 26QC and print it for documentation purposes. Also, do not forget to provide Form 16C to the landlord as proof for tax payment. The landlord may use it while filing his taxes.
