TDS on rent is covered under the Section 194I  of the Income Tax Act. This section was inserted because the government felt that income through rent should be covered under TDS Deduction. This article is about the aspects of TDS on Rent.

Who has to deduct TDS on Rent?

  • From June 1, 2017, Individuals and Hindu Undivided Families who don’t have to get their books of accounts audited and paying rent of more than Rs 50,000/month will have to deduct tax at source @ 5%.
  • If the aggregate amount that is paid or payable as rent in a financial year by a person carrying on Business or Profession is more than Rs. 1,80,000, then such a person has to deduct tax at source.

Time Limit

  • The amount of TDS on Rent shall be paid on the same day in case the payment is made by or on behalf of the Government.
  • In the case when payment is made to any person other than the Government, then in such a case TDS will be paid on or before 7 days from the end of the month in which the tax has been deducted. If the tax is being deducted in the month of March, the payment has to be done on or before 30th April.

Rates of TDS on RentTDS on rent

However, as per Budget 2017 Proposals, Individuals and Hindu Undivided Families who are paying rent of more than Rs 50,000/month will have to deduct tax at source @ 5%.

Conditions where TDS on Rent is not deductible

  • During the financial year, the amount that is payable is less than Rs. 1,80,000

If the amount of rent that is being paid or payable during the financial year is less than Rs. 1.8 lakh, then in such a case no amount of tax is paid/payable is respect of rent.

  • In case when Government agency is the Payee

As per section 196, when any amount is paid to a government agency then in such a case no tax is required to be deducted at source.

  • In case the tenant is an Individual or HUF

No tax amount is deductible if the tenant is Individual or HUF and paying a rent of less than Rs. 50,000 and they are not liable to get their books of account audited under the Income Tax Act.

  • In case the proceeds are shared by a Film Exhibitor/Distributor owning a Cinema Theatre

Representations have been received relaxation on the applicability of the provisions of Sec. 194I of the Income Tax Act to the sharing of the proceeds of film exhibition between the film distributor and the film exhibitor owning a cinema theater.

This matter has been examined by the Board and it has been decided that the provisions of Section 194I would not be attracted to such kind of payment because the exhibitor does not let out the cinema hall to the distributor.

In case you are confused about TDS Return Filing as a deductor, feel free to consult the experts at LegalRaasta. You can get comprehensive assistance with our TDS Return Filing Software which supports TDS on Salary payments (Form 24Q), Rent, Interest, Commission and other Non-salary transactions (Form 26Q), NRI (Form 27Q)and TCS (Form 27EQ).