TDS on Rent | Section 194I of the Income Tax Act

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  • Last Updated on 28 June, 2022

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1. Who is liable to deduct TDS on Rent?

This section is applicable on any person (not being an Individual or a HUF who is not liable for audit us 44AB) who is responsible for payment of rent. As per the Budget 2017, an Individual  or HUF (not liable for Tax Audit) paying rent to a resident exceeding an amount of Rs. 50,000 per month is also liable to deduct TDS @ 5% under section 194-IB. This amendment will be effective from 01.06.2017

2. When to Deduct TDS on Rent?

TDS has to be deducted on payment of any income by way of rent at the time of credit to the account of payee or at the time of payment whichever is earlier.

3. Rates of TDS Deduction:

Person shall be liable to deduct TDS on rent at the rate of:-

  • two per cent for the use of any machinery or plant or equipment; and
  • ten per cent for the use of land or building (including building) or land appurtenant to a building (including factory building) or furniture or fittings

4. Exemption Limit:

No deduction shall be made under this section if the amount of rent does not exceed Rs. 1,80,000 during a financial year.
 
Also, no deduction shall be made if the amount of rent is paid or credited to a business trust, being a real estate investment trust.
 
Further, no deduction shall be made if payee is Government or local authorities.
 

For the purpose of this section- ‘Rent’ means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,—  

(a) Land or  

(b) Building (including factory building); or

(c) Land appurtenant to a building (including factory building); or

(d) Machinery; or

(e) Plant; or

(f) Equipment; or

(g) Furniture; or

It is not necessary that asset is owned by the person receiving the rent.

Some Examples of Rent are:-
  • Warehouse charges
  • Factory Rent
  • Rent inclusive of municipal tax, ground rent (if municipal rent or ground rent borne by the tenant no tax will be deducted on such sum)
Deductor will furnish quarterly TDS return within one month from the end of quarter in Form 26Q and TDS Certificate in Form 16A shall be issued by downloading from TRACES Portal by the deductor.

5. What is the Time Limit for Payment of TDS?

 

Government Deductor

 

 

Non-Government Deductor

Tax is paid without production of an Income-tax challan on the same day on which tax is deducted           

Amount is paid or credited in the month of March on or before April 30

 

Tax deposited by an Income-tax challan on or before 7 days from the end of the month in which tax is deducted

Amount is paid or credited before March 1 within 7 days from the end of the month in which tax is deducted
Tax is deducted/collected by an office of Government and tax is paid without production of income tax challan on the same day on which tax is deducted.

6. What are the Due Dates for Filing of TDS Returns and Issue of TDS Certification i.e. Form 16A?

Every deductor responsible for the deduction of tax from payment other than salary shall file quarterly return in Form 26Q and issue quarterly TDS certificate by following dates:

 

Quarter of deduction

 

 

Due date of filing TDS Return

 

 

Due date for TDS Certificate

 

 

April to June

 

 

31st July

 

 

15th August

 

 

 

July to Sept

 

 

31st October

 

15th November

 

Oct to Dec

 

 

31st January

 

 

 

15th February

 

 

Jan to March

 

 

31st  May

 

 

15th June

 

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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