Finance Act,2017 inserted a new section 194 IB which mandates deduction of rent payable by certain class of Individual/HUF to a resident individual. This article throws some light on the said provision.
Applicability:- This section is applicable to Individuals or HUF taxpayers paying rent in excess of Rs. 50,000 per month to a resident. For the purpose of this section any rent payable in respect of Land, Building , Machinery, Furniture, Equipment, Plants and fittings is liable to TDS.
Point of TDS:- TDS must be deducted at the time of credit to account or payment whichever is earlier.
Rate of TDS:- Tax rate applicable in this section is 5% where PAN of deductee is available. In case PAN of deductee is not available, 20% TDS rate is applicable.
Time Limit of Depositing TDS:- For Rent paid in respect of months of April to February, TDS must be deposited by 7th of next month in which tax is deducted. In respect of tax deducted in March, Tax can be deposited up to 30th April.
Challan/return of TDS:- Form 26QC is used for payment of tax deducted under section 194IB. This statement is a challan cum Statement of deduction of TAX. PAN of deductor as well as deductee must be mentioned in this statement. No separate return needs to be filed as return of TDS after paying tax through form 26QC. The form is available on www.tin-nsdl.com
TDS certificate:- TDS certificate must be issued in form 16C to the deductee by the deductor within 15 days of due date of filing of 26QC. Form 16C can be downloaded from www.tdscpc.com after form 26QC has been filed by the deductor.
Interest and Penalty Applicable:- For late deduction of tax an interest of 1% per month is applicable, whereas, for late deposit of TDS, interest of Rs. 1.5% per month is applicable. If form 26QC is not filed within the time limit prescribed, late fee of Rs. 200 per day of default is applicable.
Points to Remember:-
1) No need to apply for TAN separately for deduction of tax in this section. Only PAN is needed.
2) This section is applicable only to Individual and HUF deductors not liable to audit under section 44AB of the Income Tax Act,1961. For other deductors paying rent, section 194I is applicable.
3) Section 194IB is applicable to salaried taxpayers too.
4) Rent paid in respect of residential Property in excess of Rs.50,000 per month is also liable for TDS under this section.
5) No TDS is liable on GST portion charged on Rent.
Kartik M Jain & Associates, CA in Pune is a professionally managed firm serving domestic and international clients providing services relating to direct and international taxation, indirect taxation, auditing and assurance and Consultancy. It is amongst the best CA firms in Pune. With a team of expert and experienced Professionals, The firm aims to provide quality and effective services. The firm provides complete end to end solutions to your complete business needs under one roof. Our sister Firm, Payal K Jain & Associates, a Company Secretary in Pune provides services in relation to Company Formation in Pune and across India, Corporate Law and Compliance, ROC filings, FEMA, Trademark Registration, etc.
Our Services :- GST consultation, Chartered accountant, Income Tax consultancy, Corporate law, International Taxation, Transfer Pricing, Regulatory & Advisory Services.
