1. Now you can deduct TDS of 5% for rent above Rs 50000: Here’s all you need to know

Now you can deduct TDS of 5% for rent above Rs 50000: Here’s all you need to know

In order to widen the scope of TDS, the government has proposed to insert a new section of 194-IB in the I-T Act to provide that an individual or a HUF

By: | Updated: February 6, 2017 11:16 AM
In a bid to put control over the unaccounted high rental income and formalise the rent mechanism, the FM has increased the scope of TDS.

In order to widen the scope of TDS, the government has proposed to insert a new section of 194-IB in the I-T Act to provide that an individual or a HUF (other than those covered under 44AB of the Act), responsible for paying to a resident any income by way of rent exceeding Rs.50000 for a month or part of month during the previous year, shall deduct an amount equal to 5% of such income as income-tax thereon. The following amendment will take effect from 1st June 2017.

Further, a proposal has been made in Act that tax shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

In a bid to put control over the unaccounted high rental income and formalise the rent mechanism, the FM has increased the scope of TDS. The existing provisions of section 194-I of the Act, among other things, provide for TDS at the time of credit or payment of rent to the account of the payee beyond a threshold limit.

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It is further said that an individual or a Hindu undivided family who is liable for tax audit under section 44AB for any financial year immediately preceding the financial year in which such income by way of rent is credited or paid shall be required to deduction of tax at source under this section. Therefore, under the existing provisions of the aforesaid section, an Individual and HUF, being a payer (other than those liable for tax audit) is out of the scope of section 194-I of the Act.

In order to reduce the compliance burden, it is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN) as per section 203A of the Act. It is also proposed that the deductor shall be liable to deduct tax only once in a previous year.

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It is also proposed to provide that where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

 

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  1. A
    AMARNATH SEN
    Nov 16, 2017 at 5:45 pm
    WE ARE PAYING OFFICE RENT OF RS 35000/- PER MONTH. SHOULD I DEDUCT TDS BEFORE PAYMENT TO THE LANDLADY, WHO IS AN WIDOW.
    Reply
    1. K
      KRISHAN KANT GUPTA
      Jun 27, 2017 at 7:18 pm
      WHAT IS DIFFERENCE BETWEEN 94I AND 94IB
      Reply
      1. P
        PARESH DOSHI
        May 29, 2017 at 4:36 pm
        tds on rent what about rent which we are getting due to our aprtmnet is under redevelopement where in builder is paying rent which is less then Rs 35000, so tds is applicable on rent as Compensation receiveing from Builder ? please reply
        Reply
        1. Prakash Pandey
          May 12, 2017 at 6:56 am
          Our company has taken an apartment on rent for directors use... rent is Rs 37000 per month. Should we deduct TDS and make payment of monthly rent or TDS seduction below 50K is not done...pls clarify..
          Reply
          1. S
            sriniivasan
            Dec 5, 2017 at 11:52 am
            Since you are a company , the limit is Rs 1,80,000 PA for TDS
            Reply
          2. D
            Deepshikha
            May 1, 2017 at 12:31 pm
            what about agricultural rent? will tds be applicable?
            Reply
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