As per the new provision, if your monthly rental payments exceed Rs 50,000, then you are required to deduct TDS on it and submit the same to the Income Tax Department.
Are you living in a rented accommodation and paying a high amount of rent? You are now required to deduct TDS (tax deducted at source) on it and submit the same to the Income Tax Department. As per the new provision, effective from June 1, 2017, if your monthly rental payments exceed Rs 50,000, then you are required to deduct 5% TDS on it.
The Income Tax Department’s latest campaign on TDS informs that individuals or HUFs (except those liable to audit under clause (a) and (b) of section 44AB of the I-T Act 1961) paying monthly rent to a resident in excess of Rs 50,000 need to deduct and deposit TDS @5% under section 194-IB of the I-T Act 1961 at the time of deposit of rent, for the last month of the Financial Year or in the month in which premises are vacated or the agreement is terminated.
Such individuals or HUFs are then required to upload details of the tax deducted along with correct PAN of the landlord in Form No 26QC on TIN website (https://www.tin-nsdl.com). The tenant, however, is not required to obtain TAN.
The TDS certificate can then be downloaded and issued to the landlord in in Form No 16C from the TRACES website ( https://www.tdscpc.gov.in) within 15 days of uploading the Form No 26QC.
It may be noted that deducting tax at source is a step by the Income Tax Department in order to avoid tax evasion. It is based on the principle ‘Pay as you earn’. The payer is required to make TDS deductions, irrespective of the mode of payment, which can be cash, cheque or credit.
“There are different TDS rates that are applicable to residents and non-resident taxpayers, as well as to different domestic and international companies operating in India. Any individual responsible for making any type of payment must deduct TDS at applicable rates and deposit it with the government within the specified time. TDS rates may vary depending on the nature of the income earned and whether the person to whom payment is being made is an individual or a company,” informs Chetan Chandak, Head of Tax Research, H&R Block India.