When is TDS to be deducted from house rent payments to the landlord?
TDS) at a specified rate from rental payment. Here is a look at when to deduct TDS from house rent payment and how to deposit.
Who should deduct TDS?According to Archit Gupta, Founder and CEO, Clear, a tax filing platform a tenant must deduct TDS from their house rent if the rental amount is Rs 50,000 or more for a month or part of it.
What is the rate of TDS?Section 194IB of the Income Tax Act, 1961 has fixed the TDS on house rent at 5%. Suppose tenant is paying a yearly rent of Rs 6,12,000 (Rs 51,000 monthly), then he will deduct a TDS at 5%, i.e., Rs 30,600 (Rs 6,12,000*5%). It may happen that the landlord is not sharing his PAN number or his PAN has become inoperative. “In such cases, the tenant will deduct TDS at a higher rate of 20% under Section 206AA of the Income Tax, 1961,” said Avinash Shekhar, Founder and CEO, TaxNodes, a Bengaluru based tax filing assistance company.
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CA Harish Menon, co-founder & head of investments and product research at House of Alpha, a financial planning company, said, “If the PAN of the landlord is inoperative, he/she will not get credit for this TDS while filing income tax returns.”Click here to know how come one has to pay Rs 6000 in order to make their PAN active again if it has become inoperative.
When will a tenant deduct TDS on house rent?The TDS on house rent must be deducted either at the end of a particular financial year, before making monthly rent payment, the date on which the property is vacated or the rent agreement is terminated with the landlord, whichever is earlier.Example 1: If a tenant has a rent agreement with a landlord of 11 months from September 2023 to July 2024, then the
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