Success is never owned. It’s rented, and its due every day. However, the rent of property that is due monthly, is applicable to TDS. This guide covers the TDS applicable on rent under section 194I.
The Government has proposed to increase the threshold for deduction of tax from rental payment from Rs 1,80,000 to Rs 2,40,000.
Excluding individuals and HUF, who are paying rent to a resident, the person must deduct TDS if the aggregate amounts is greater than Rs 1,80,000 per annum. Individuals and /or HUFs who are subject to tax audit are also under this obligation to deduct TDS. The definition of rent also includes service charge payable irrespective of the name under which it is paid.
The term “Rent” means any payment given in lease, sub-lease, tenancy, or any other agreement or arrangement for the use of the following either separately or together:
In cases where the landlord collects advance payment in the form of deposit on a condition that it will be refunded at the time of vacating the building, no TDS is to be deducted since such deposit is not a form of income. However, if rent is paid in advance, not in the nature of refundable security, is subject to deduct TDS.
Section 194I do not mandate TDS should be deducted on monthly basis. When rent is credited on annual basis, TDS will also be deducted once a year. In case rent is credited quarterly, TDS also gets deducted quarterly.
Section 194I describes TDS to be deducted on rent. But the following are a few cases, where income is an indirect rent and hence TDS must be deducted.
To deduct TDS under section 194I, the deductor must file Form 26Q on or before the following date:
|Period of filing||Deductor is Non-Government officer||Deductor is Government Officer|
|April-June||15th July||31st July|
|July-September||15th October||31st October|
|October-December||15th January||31st January|
|January-March||15th May||15th May|
Non-salaried individuals are issued TDS certificates, as per rule 31, on a quarterly basis in form 16A. The certificate must be issued on or before the dates mentioned.
It is mandatory for all the deductors to issue TDS certificate in Form No. 16A, as per CBDT Circular No. 1/2012, as on 9-4-2012, by generating the certificate through TIN central system. It can be downloaded from the TIN website using the unique TDS source certificate number. These provisions are applicable in respect of all amounts deducted on or after 1-4-2012. The certificate issued can be verified either by using digital signature or manual signature.
|Where the payment is made by or on behalf of Government|
|On the same day|
(without using any challan)
|Where the payment is made in any other way other than Government:|
1) If the amount is paid or credited in the month of march
2) Any other case
|On or before 7 days from the end of the month in which deduction is made where tax is paid along with an Income Tax Challan.|
On or before April 30th.
To know how to utilize the tax saving options available to you and for better tax saving and planning options, consult your personal tax expert at H&R Block India.