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Section 194IB – TDS on Rent of Property | Company Vakil

Section 194IB – TDS on Rent of Property

As per Finance Act, 2017, “TDS on Rent” beneath section194IB is in charge to be deducted through Individuals or HUFs (Hindu Undivided Family). After section 194-IA, Government of India was once inserted Section 194-IB. The key objective of inserting this part is to curb tax evasion with the aid of landlords. In this article, we seem at Section 194 IB of Income Tax in detail.

Rent as per section 194-IB

Rent according to area 194-IB potential that any payment beneath any tenancy, lease, sub-lease or any other association for below stated uses:

  • Building consisting of manufacturing facility building
  • Land
  • Land that belongs to a structure including factory building
  • Machinery
  • Plant
  • Furniture
  • Equipment
  • Fittings

The person responsible to deduct TDS on Rent

All individuals or HUFs (except these responsible for audit under clause a and b of section 44AB) paying month-to-month hire to a resident extra than Rs. 50,000 are accountable to deduct TDS beneath area 194-IB.

Note on section 44AB

As per Clause a and b of area 44AB, if the total sales, gross receipts or turnover from the enterprise or career of a HUF or an Individual exceed the financial limits precise during the financial 12 months straight away preceding the monetary year, it is responsible to audit.

Rate of TDS

Section 194-IB gives that for all the transactions with effect from June 1, 2017, tax at a price of 5% must be deducted by the Tenant, Payer or Lessee at the time of taking a charge of rent to, Lesso, Landlord or Payee. The tax so deducted has to be deposited to the Government Account through online with the aid of any of the approved financial institution branches.

Responsibility of Tenant

As mentioned above, all eligible persons or HUFs paying a monthly lease to a Landlord extra than Rs. 50000 are responsible to deduct TDS underneath area 194-IB. The price of deduction identification 5 percent of the lease charge made to the resident.

  • Collect the Permanent Account Number (PAN) of the resident and affirm the important points with the Original PAN card.
  • PAN of the Landlord and Tenant must be mandatorily submitted in the online Form for furnishing data regarding the rent.
  • Do now not commit any mistake in quoting the PAN or other important points in the on-line Form. Note: For rectifying the statistics furnished, you have to contact the Income Tax Department.
  • Download and grant TDS certificate in Form 16C from TRACES and issue to the Payee inside 15 days from the due date of submitting of the challan-cum-statement in Form 26QC.
  • If the Payee is a non-resident, legal responsibility to deduct TDS arises under section 195 of the Income-tax Act, 1961

Note: Tenant or Payer of the rent on property is now not required to procure Tax Deduction Account Number (TAN)

Responsibilities of Payee/Landlord

  • Provide PAN to the Tenant for furnishing data regarding TDS to the Income Tax Department.
  • Verify credit score of taxes deducted with the aid of the Tenant in your Form 26AS Annual Tax Statement.
  • Insist on obtaining Form 16C from the tenant who has been downloaded from TRACES internet site only.

Know greater about Matching Form 26AS & Form 16

Form 26QC

Form 26QC is the challan cum assertion for reporting the transactions responsible to TDS on hire below section 194-IB of the Income-tax Act.

Filing structure 26QC

As per rule, Taxpayer has to furnish Form 26QC in following scenarios:-

  • The taxpayer has to mandatorily submit the Form at the give up of every Financial Year in case the settlement period incorporates extra than one Financial Year and the lease has been paid at some stage in the year
  • In case the agreement length falls in the same economic year, the taxpayer has to mandatorily post the shape in the month when the premise is vacated or when the termination of the agreement.

The due date for the price of TDS on rent

The due date for payment of TDS on hire is 30 days from the cease of the month in which the lease is paid. two

Example: If the taxpayer has made a deduction of the lease in December, then the relevant TDS have to be deposited on or earlier than thirty days, that is January 30th.

Procedure to pay TDS on the lease of a property

The tenant of the property has to provide statistics related to the transaction, online thru the TIN website.

Step 1: Access domestic web page of Tax Information Network.

Step 2: Select Online shape for furnishing TDS on the property (Form 26QC) for imparting small print in structure 26QC.


Step 3: Upon clicking on this, you will be redirected to e-Payment page, choose Form 26QC.

Step 4: You have to furnish the following details in Form – 26QC.

  • Corporation Tax (Companies)
  • Income Tax (Other than Companies)
  • Status of the Landlord/Lessor/Payee
  • PAN Details of Landlord/Lessor/Payee
  • Address of the Tenant/Lessee/Payer
  • Property Detail
  • Amount Paid/Credited
  • Tax Deposit Details
  • Date of Tax Deduction

Note: If Date of furnishing Form 26QC is past prescribed due date, the identification may additionally appeal to late filing fee u/s 234E.

Step 5: After correctly providing details of the transaction, the tenant can either make the fee online through e-tax price choice without delay or by using journeying any of the approved Bank branches n subsequent date.

Step 6: If you are making price via banks, such bank branches will make e-payment barring digitization of challan. The bank will gain the challan small print from the online shape TIN website.

Kindly be aware the Acknowledgement variety for future reference. On successful payment of TDS, a challan counterfoil will be displayed. Counterfoil includes CIN, fee small print and the financial institution name thru which the charge has been made.

Note: This counterfoil is a proof of price being made.

Download Form 26QC

The tenant may additionally be in a position to print the structure 26QC after price from TIN website.

Provide important points such as PAN of Tenant, PAN of Landlord, Acknowledge Number and Financial Year.

After getting into the important points click on submit. You can print Form 26QC.

Form 16C

Form 16C is the TDS certificate to be issued with the aid of the Tenant of property to the Landlord of property with admire to the tax deducted and deposited as TDS on the hire of property under part 194-IB of the Income-tax Act.

Penalties for Non-compliance

As per section 234E of the Income-tax Act, 1961 read with Rule 31A (4B) of Income-tax Rules, 1962, failure on the part of tenant to furnish details in Form No. 26QC on-line within 30 days from the stop of the month in which the tax payment is made will entice levy of charge at the fee of Rs.200 for every day to be paid through the tenant.


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