TDS on Rent – Applicability & TDS Rate

Last Updated On: Aug. 4, 2019, 3:32 p.m.
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TDS on Rent – Applicability & TDS Rate

Section 194-1 of the Income Tax Act deals with the rent. Rent means a payment under any lease, sub-lease, tenancy or any other arrangement or agreement for the use of any of the following mentioned below, separately or together:

  • Land
  • Building.
  • Land appurtenant to a building.
  • Machinery.
  • Plant.
  • Equipment.
  • Furniture.
  • Fittings.

What is Section 194i of the Income Tax Act?
Under Section 194i a person (other than Individuals and Hindu Undivided Family) who is paying rent is liable for Tax deduction at source. The tax can be deducted at source when the total amount of rent to be received or paid in a particular financial year is more than Rs. 1,80,000. While Individuals and Hindu Undivided Families who come under the purview of the taxation are also liable for tax deduction at source, the aggregate limit was previously Rs.1,80,000 but now with effect from 1st June 2017, the rule of the payments has changed.

Now both Individuals and Hindu Undivided Families are obligated for tax deduction at source at 5% of the rent collected given the rent exceeds Rs 50,000.

 Who is required to deduct TDS on rent?

TDS on rent should be deducted by any person, apart from an individual or HUF, making a payment of rent to any resident, if the total amount of rent paid in a year is over Rs.1,80,000.                                     

Individuals and Hindu Undivided family, who are covered in Section 44AB (Section 44AB deals with tax audit) are needed to deduct TDS on rent.

Time Limit for the Payment of TDS

What are the due dates for filing of the TDS Return and issue of TDS Certificate i.e. Form 16A?

Every deductor responsible for the deduction of tax from payment other than salary shall file quarterly return in Form 26Q and issue quarterly TDS certificate by following dates:

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