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March 4, 2021

All about TDS on Rent under section 194IB and Steps for payment of TDS through Form 26QC

by CA Shivam Jaiswal in Income Tax

All about TDS on Rent under section 194IB and Steps for payment of TDS through Form 26QC

In case an individual in rented property and rent amount is more than Rs. 50,000 per month then TDS is required to be deducted under section 194IB at the rate of 5% on the total rent paid. The Finance act 2017 has introduced a section 194IB under the income tax act, this provision was applicable from 1st June 2017. No, TAN is required for deducting TDS under section 194IB. This article will highlight about applicability of 194IB and steps to pay tax through Form 26QC.

Applicability and rate of tax:

Applicability:

Section 194IB is applicable to all individual or HUF (other than those referred in the section 194- I) who is paying a monthly rent of more than Rs. 50000.

Note: as per section 194I individual or HUF who is required to get his books of accounts audited under section 44AD are not required to deduct tax under section 194IB

Rate of TDS applicable:

The payee has to deduct TDS at the rate of 3.75% on the rent amount paid in case no PAN is served by the recipient then TDS is deductible at the rate of 20% subject at maximum limit of rent payable for the month of march or the last month of tenancy as the case may be.

The rate of 3.75% is applicable for payment of rent made upto 31st March 2021. Thereafter TDS is to be deducted at the rate of 5% on the rent amount paid.

When the need for deduction of TDS arises and the due date for payment of TDS?

Time of deduction of TDS:

TDS is needed to be deducted only at once in a year and not in every month. TDS is to be deducted at earlier from the following:-

  • Time of credit of rent to the account of payee for the month of March or the last month of tenancy, if property is vacated during the year as the case may be
  • Time of payment of rent to payee for the month of March or the last month of tenancy, if property is vacated during the year as the case may be

Due date for payment of TDS:

The payment is to be made by the tenant by using form 26QC which is a challan cum statement within 30days from the end of month in which deduction is made. For instance if the rent payment is made in the month of March then TDS is to be deducted till 30th April.

Note:

a)    If the person vacate the house and move to another and rent of both houses are more than Rs. 50000 then form 26QC is to be made twice in a year for each landlord, in other words the tenant needs to file form 26QC for each landlord.

b)    In case of single landlord and single tenant then form is require to be filed only once in a year

c)    In case of two landlord and single tenant two form is to be filed in the respective share of the landlord

d) Payment made under the terms of lease, sub lease, tenancy or any other agreement or arrangements for the use of any land or building or both are also covered under this section.

e) Refundable security deposit made to landlord at the time of taking property on rent by tenant should not be covered under this section.

f) Rent payment for plant and machinery, equipments, furniture and fittings etc are covered under section 194I

g) If payment is made to non-resident then TDS is deductible under section 195.

Procedure for filing Form 26QC:

Tenant who is paying rent of more than Rs. 50,000 is required to deduct TDS at the rate of 3.75% and deposit such TDS through form 26QC. Following are the steps to file Form 26QC- TDS on rent of more than Rs. 50,000

Step 1:   Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp  

Click on “Proceed” button of” TDS on Rent of property (Form 26QC)”

Step 2: Filing of Form

Fill the complete form as applicable below:

  1. Tax Payer Info: Enter the details of both Tenant and Landlord in this page:
  1. Select Status of the Landlord/ Payee/ Lessor i.e. whether he is resident or Non- resident
  2. Select whether PAN of Landlord is available or not
  3. Enter PAN no of the Tenant, confirm the PAN of the Tenant by entering once again
  4. Enter PAN no of the Landlord confirm the PAN of the Landlord by entering once again

Now click on “Next” button

Step 3: Enter Address of Both Tenant and Landlord:

  1. Enter complete Communication address, mail id and mobile no of Tenant.
  2. Select “Yes” or “No” in case there is more than one Tenant.
  3. Enter complete address, mail id and mobile no of Landlord.
  4. Select “Yes” or “No” in case there is more than one Landlord.

Step 4: Enter Property details: Now enter the details of the property let out:

Now enter the details of property which is being let out by the Landlord the details include:

  1. Type of property rented i.e. whether the property is land or building or both
  2. Complete address of the property let out
  3. Period of Tenancy
  4. Value of Rent Payable
  5. Value of rent paid in last month
  6. Enter the amount paid or credited
  7. TDS on amount in (f) at 5%

After above details are entered click on “Next” button

Step 5: Payment Info:

Enter the payment information as below:

  1. The mode of payment i.e. payment of tax online or payment of tax through bank visit. In case of payment of tax online the person can pay tax online and in case of payment of tax through bank visit the person has to take hard copy of Form 26QC to the bank and pay through cheque
  2. Enter the of Date of Payment or Credit of payment to the Landlord
  3. Enter the Date of Tax deduction
  4. Enter the captcha code and click on “Proceed” button

After above step Form 26QC gets generated.

In case payment of tax online it will redirect you to the bank portal, now enter the net banking login Id password and make payment. On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment​ being made.

In case payment of tax through Bank visit it will redirect you to download “Form 26QC”, download the form and take print outs.

Enter your email address:

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