Are you paying Rent above Rs. 50k
every month to someone?
Some important points you need to know
• Tax deduction to be done by
Tenant. (Individuals and HUFS)
Landlord – Residential status
should be “Resident” (Any Person –
Individual/HUF/LLP/Company etc.)
45%
Tenant Resident/Non-Resident/
Not Ordinarily Resident (Basically,
any Individual or HUF)
This is applicable to every
individual/HUF except if:
1. You do a business and have a
turnover exceeding 1 Cr.; or
2. You are in a profession and
turnover exceeds 50 Lakhs.
Those who are (1) & (2) shall deduct
TDS at 10% under Section 194 I
Those who are not in (1) & (2)
mentioned above, have to deduct
TDS at the rate of 5% before
remitting it to their landlord.
Rent can be for any purpose –
Residential/Commercial.
The tenant will deduct 5% TDS and
file Form 26QC.
Form 26QC needs to be filed:
1. By 30th April of next Financial year – If the
agreement was active for the whole
FY. (Within 30 days of the close of
FY)
Or
2. Within 30 days of the end of the
month in which the tenant vacates
during the year.
Whichever is Earlier
Example
Let’s Say, Monthly Rent is 60k for
12 months. (Apr 2023-March 2024)
Total Rent – 720,000. /-
TDS – 36,000 /-
Now, the tenant will withhold 36k
in March 2023’s rent & deposit 36k
of TDS deducted by Filing a TDS
Form – 26QC in which he will
mention all the details of himself
along with details of the landlord
with PAN, address, etc.
As discussed, the Tenant needs to
file this form 26QC within 30 days
from the end of the FY or when the
tenant vacates.
In this situation 30th April 2024
In case of delay, A penalty of Rs.
200 per day (maximum up to TDS
amount of 36k) along with Interest
at the rate of 1.5% per month/part
of the month shall be additionally
charged.
Landlord will be able to claim this
36k of TDS while filing his Income
tax return for FY 24-25
The tenant need not take any TAN
number for deducting TDS in this
situation.
He can deduct the TDS of 36k of
the landlord through his PAN itself.
If there are more than one tenant or
landlord, Form 26QC has to be filed
for a unique tenant-landlord
combination for their respective
shares.
The tenant will provide Form 16C to
the landlord for the TDS deduction
made.
The deductor (tenant) can
download Form 16C from the TRACES website within 15 days of
submission of Form 26QC.
This is brought so that people
earning high rentals disclose that
income in their ITRs.
This will be reflected in the
landlord’s AIS, TIS, and 26AS &
they cannot hide it by not showing
it as Income in their ITR.
