TDS Section 194IB
A brief look at TDS on rent under Section 194IB
In this post, We have explained TDS on rent (Section 194IB) for individuals and families (HUFs).
- Meaning of Section 194IB of the Income Tax Act
- What does rent mean according to Section 194IB?
- Rate of TDS under section 194IB
- Penalties for non-deduction of tax and delay in the deposit of tax
- TDS Payment, Return, and Certificate Rules against Rent u/s 194IB
- Difference Between Section 194I and 194IB
- FAQs
Meaning of Section 194IB of the Income Tax Act
What does rent mean according to Section 194IB?
As per this section, rent refers to the money paid by someone under a rental, lease, sub-lease, or any other agreement for various things, such as:
- Land
- Land with a factory building
- A building, including a factory structure
- Machinery
- Furniture
- Equipment
- Plant
- Fittings
The payee may or may not own the assets stated above.
Rate of TDS under section 194IB
Penalties for non-deduction of tax and delay in the deposit of tax
To avoid problems, remember the important dates for TDS (Tax Deducted at Source). If you miss these dates, you may face additional charges.
Here’s what you need to know:
- If you forget to deduct TDS on time, you will be charged 1% interest per month or part of a month from the date you were supposed to remove it until you do.
- If you deduct TDS but don’t deposit it to the government on time, you’ll be charged 1.5% interest per month or part of a month from the deposit due date until you deposit it.
- You also need to submit a TDS return using Form No. 26QC; if you are late, there’s a penalty. The penalty is Rs 200 per day from the filing deadline until you submit it, but it can be the total TDS amount at most.
TDS Payment, Return, and Certificate Rules against Rent u/s 194IB
In order to deduct TDS under section 194IB, the following rules apply:
- You must deposit the TDS amount within 30 days after deducting it.
- To deposit the deducted TDS, tenants should use a challan-cum-statement in Form No. 26QC.
- The TDS payment (Form No. 26QC) should be made electronically to the Central Government, either through the Reserve Bank of India, State Bank of India, or an authorized bank.
- Anyone deducting TDS under section 194IB must give the payee or owner a TDS certificate in Form No. 16C. This should be done within 15 days from the due date for submitting the challan-cum-statement in Form No. 26QC. As determined by tax authorities, you can generate and download Form No. 16C from a specified web portal.
- To deduct TDS or file a TDS return, the payer or tenant must obtain a TAN (Tax Deduction and Collection Account Number). Form No. 26QC can be submitted by providing challan details.
Difference Between Section 194I and 194IB
The below table shows the important differences between these two sections:
| Basis | Section 194I | Section 194IB |
| Applicability | Applies to everyone paying rent except individuals and Hindu Undivided Families (HUFs). | Applies to all individuals and HUFs not covered in Section 194I. |
| Applicable Limit | Applicable limit is Rs. 1,80,000 per year. | Applicable limit is Rs. 50,000 per month or part of the month during the financial year. |
| TDS Rate | TDS rate is 10%. | TDS rate is 5%. |
| TAN requirement | Requires a TAN (Tax Deduction and Collection Account Number). | Does not require a TAN, but PAN is required. |
| Payment and Return | Involves monthly payment and quarterly return. | Involves payment and return once a year. |
We have concluded this post TDS Section 194IB. Feel free to share your views and opinions in the comment section below.
FAQs
1.Does GST apply to rental charges?
Ans: GST applies to rent for commercial properties, but it does not apply to residential property rent.
2.What is Form 16C?
Ans: Form 16C is a certificate given by the person who deducts the tax (the tenant) to the person from whom the tax is deducted (the landlord) for the tax taken out under section 194IB of the Income-tax Act, 1961.
3.Who is in charge of TDS on rent?
Ans: The person who pays the rent should deduct the TDS from the payment and then deposit it with the government.
4.How can I get a deduction for rent paid?
Ans: You can claim a deduction for rent paid either as HRA (House Rent Allowance) under section 10(13A) or as 80GG.
