TDS on Rental Property above Rs 50,000 in India

GST (Goods & Service Tax)

GST is applicable only on Commercial Property only if the Landlord/owner comes in the ambit of GST

TDS (Tax Deducted at Sources)

In order to bring the high rental income group within the ambit of tax, the government in the Budget 2017 inserted a new Section – 194IB.

The TDS deducted should be paid within 30 days from the end of the month in which the tax was deducted. It shall be accompanied by a challan (cum) statement in Form 26QC. The TDS so deducted can be paid to the government electronically through the Reserve Bank of India, State Bank of India, or any other authorized bank or via below link

Indian Owner/Landlord

Under new Section – 194IB, individuals and HUFs who pay rent of Rs 50,000 or above will have to deduct TDS at the rate of 5% or 3.75%. This section is effective from 01.06.2017.

Non Residential (NRI) Owner/Landlord

If the landlord/Owner is a Non-resident, the liability to deduct tax arises under section 195 of the Income-tax Act.

The rate applicable in this case will be 30% plus surcharge and education cess i.e 31.2%.

It is important to note here that in case of non-residents there is no minimum amount prescribed for applicability of TDS.

TDS has to be deducted irrespective of the quantum of amount.

NRI Owner can ask for lower deduction or no deduction certificate provided his total income in India is below exemption limit.

The rent proceeds will have to be credited to NRO account of NRI Owner.

Points to be remembered by

Owner/Landlord of the Property

  1. Provide your PAN to the Tenant for furnishing information regarding TDS to the Income Tax Department.
  2. Verify deposit of taxes deducted by the Tenant in your Form 26AS Annual Tax Statement.
  3. Insist on obtaining Form 16C from the tenant which has been downloaded from TRACES website only.

Tenant of the Property

  1. All individuals or HUFs (except those liable to audit under clause a and b of section 44AB) paying monthly rent to a resident in excess of ₹ 50,000 per month are liable to deduct TDS under section 194-IB
  2. Deduct tax @ 5% or 3.75% per month from the rent payment made to the Landlord (depending upon the Date of Payment/Credit to the Landlord).
  3. Collect the Permanent Account Number (PAN) of the Landlord and verify the same with the Original PAN card.
  4. PAN of the Landlord as well as Tenant should be mandatory furnished in the online Form for furnishing information regarding the rent.
  5. Do not commit any error in quoting the PAN or other details in the online Form. For the purpose of error rectification you have to contact Income Tax Department.
  6. Download and furnish TDS certificate in Form 16C from TRACES and issue to the Landlord / Lessor/ Payee within 15 days from the due date of furnishing of the challan-cum-statement in Form 26QC.
  7. If the Landlord / Lessor/ Payee is a non-resident, liability to deduct TDS arises under section 195 of the Income-tax Act, 1961

Link to pay TDS on Rent of Property  (Form 26QC)

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