Step wise online process to pay 5% TDS on Rent payment above 50,000 per month Form 26QB Section 194IB of Income Tax

In case Rent payment above 50,000 per month section 194IB shall be applicable. Section 194IB has been inserted in the Income Tax Act through Finance Act 2017, this provision was made applicable from 1st June 2017. As per section 194IB in case an individual staying in a rented house/flat pays rent of more than Rs. 50,000 per month then it is mandatory for the person to deduct 5% TDS from the rent paid.

For Financial Year 2019-20 the date to pay 5% TDS is 31 March 2020, however due to Covid-19 the due date to pay and file TDS in Form 26QB has been extended to 30 June 2020. So all those who has not deposited tax and uploded Form 26QB can do till 30 June 2020 for FY 2019-20.

The following are the conditions for deducting TDS on rent payment above Rs. 50,000:

1. It is applicable to all individual or HUF who is paying a monthly rent of more than Rs. 50,000.
2. As per section 194IB 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, they are covered under section 194I(TDS on rent)
3. The payee has to deduct TDS at the rate of 5% 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.
4. 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
5. No TAN is required for such person to deduct and deposit TDS to Government
6. The payment is to be made by the tenant by using form 26QC which is a challan cum statement within 30 days 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.
7. If the person vacates the 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 landlord, in other words the tenant needs to file form 26QC for each landlord.
8. In case of single landlord and single tenant then form is required to be filed only once in a year
9. In case of two landlord and single tenant two form is to be filed in the respective share of the landlord
10. In case of two landlords and two tenant four form is to be filed in the respective share
11. In case the form is to be filed more than once then the payment is also need to be made more than one time as for each landlord for their respective share a separate payment is to be made
12. Under section 194IB payment of rent to a resident landlord for use of any land or building or both exceeding Rs. 50,000 per month is liable for tax deduction.
13. 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.
14. Refundable security deposit made to landlord at the time of taking property on rent by tenant should not be covered under this section.
15. Rent payment for plant and machinery, equipment, furniture and fittings etc. are covered under section 194I
16. If payment is made to non-resident, then TDS is deductible under section 195.

Online 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 5% 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:

• Select Status of the Landlord/ Payee/ Lessor i.e. whether he is resident or Non- resident
• Select whether PAN of Landlord is available or not
• Enter PAN no of the Tenant, confirm the PAN of the Tenant by entering once again
• 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:

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

• Type of property rented i.e. whether the property is land or building or both
• Complete address of the property let out
• Period of Tenancy
• Value of Rent Payable
• Value of rent paid in last month
• Enter the amount paid or credited
• 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.

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