TDS on rent payment is applicable under Section 194I of the Income Tax Act in India. Here are the key points regarding TDS on rent payment:
- Threshold Limit: TDS on rent payment is applicable if the total rent paid or payable during the financial year exceeds Rs. 2,40,000.
- Rate of TDS: The rate of TDS on rent payment depends on whether the payee is an individual or a non-individual entity:
- For payments to individuals or Hindu Undivided Families (HUFs), if the rent amount exceeds Rs. 50,000 per month, the TDS rate is 5%. If it doesn’t exceed Rs. 50,000 per month, no TDS is applicable.
- For payments to non-individual entities like companies, firms, etc., the TDS rate is 2% of the rent amount.
- Time of Deduction: TDS on rent is deducted at the time of payment or credit of rent, whichever is earlier.
- PAN of the Landlord: The tenant must ensure that the PAN of the landlord is provided and correctly mentioned while deducting TDS. If the landlord does not have a PAN, TDS must be deducted at a higher rate of 20%.
- TDS Return Filing: The tenant is required to file a quarterly TDS return in Form 26QC and issue Form 16C to the landlord as proof of TDS deduction.
It’s essential for both tenants and landlords to be aware of these provisions to ensure compliance with tax regulations. If you are looking for any CA firm in Gurgaon who can help you to ensure proper tax compliances, ebex consulting can help you to ensure the same.
