TDS on Rent Payment exceeding 50000 per month

The Central Board of Direct Taxes (CBDT) has notified the amended rules in connection with the new provision mandating payment of TDS on rent above Rs.50,000/- per month. Finance Act, 2017 inserted a new provision, Section 194IB in the Income Tax Act as per which, Individuals and HUFs paying rent of Rs 50,000 or more per month must deduct 5% tax at source. The provision is applicable w.e.f 01.06.2017. As per the new provision, TDS is deductible at the rate of 5% of the rent paid or payable. If the person receiving rent doesn’t furnish his PAN then TDS is deductible at the rate of 20% subject to maximum limit of amount of rent payable for the month of March or last month of tenancy as the case may be. In connection with the above provision, the Board has now, amended the income Tax Rules. Form Nos. 16C and 26QC also has been released in this regard.

No requirement of TAN Number

Individual/HUF (other than those who need to get a tax audit done) need not get a TAN number to deduct TDS. TAN number is basically the Tax deduction and collection account number that is mandatory if one has to deduct TDS under the income tax act. This requirement has been relaxed.

TDS to be deducted once in a Financial Year

To further simplify the process of TDS, it can be deducted only once in the financial year. TDS can either be deducted at the time of credit of the rent to the account of the payee (landlord) for the last month of the financial year OR the last month of the tenancy if the property is vacated during the year OR at the time of payment whichever is earlier.