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TDS on Rent 2019

Income Tax Update : Budget 2019-20

  • No Income tax for individuals with Annual Taxable Income of upto Rs. 5 lakh. No change in Income Tax Slabs.
  • Surcharge increased by 3% for individuals with Income of Rs. 2-5 crores and by 7% for income more than Rs. 5 crores.
  • Aadhaar card can now be used interchangeably for PAN card. Thus, you no longer need PAN to file income tax returns.
  • Additional deduction of Rs. 1.5 lakhs for interest on home loan availed for purchase of Affordable houses of up to Rs. 40 lakh till March 2020.
  • Income tax deduction of Rs. 1.5 lakhs for interest on loan taken to buy an electric vehicle.
  • The annual turnover limit for corporate tax of 25% increased to Rs. 400 crores.
  • TDS of 2% on cash withdrawal of more than Rs. 1 crore in a year from a bank account to discourage business payments in cash.
  • Excise Duty on fuel hiked by Re. 1.

Effective 1st June 2017, scope of TDS on rent has been extended to rent paid for flats and apartments rented by individual taxpayers. The TDS liability on rent paid on commercial premises and TDS on rent paid by non individual entities like companies, firms and partnerships remains unchanged.

TDS Rates on Rent u/s 194-I and 194-IB

Type of Rent TDS Rate Section of IT Act Explanation
Rent paid towards commercial/ industrial premises 10% 194-I Tax to be deducted and deposited monthly
Rent paid towards residential premises leased by non individual entities like companies 10% 194-I Tax to be deducted and deposited monthly
Rent paid towards residential premises leased by salaried and self employed individuals 5% 194-IB Tax to be deducted and deposited once at end of financial year or end of lease; TAN not required

Tax Deducted on Rent u/s 194-I at 10%

  • Any entity (including companies, firms, partnerships) or individual/ HUFs subject to tax audit paying rent of more than Rs. 1,80,000 in a year is liable to deduct TDS on such payments
  • Not applicable for salaried and self employed individuals not subject to tax audit. Such individuals were exempt from deducting TDS upto 31st may 2017. Effective 1st June 2017 they are required to deduct TDS under section 194-IB – see explanation in next section on this page
  • Tax is to be deducted on rent paid towards any type of premises – residential, commercial, shop or industrial
  • TDS needs to be deducted with each rental payment and deposited to the government account every month
  • In case service tax or GST is levied on rental by the owner, TDS is to be deducted only on the rent amount and not on service tax or GST amount

Tax Deducted on Rent u/s 194-IB at 5% - for salaried and self employed individuals effective 1st June 2017

  • Tenants paying rent of Rs. 50,000 (Rupees fifty thousand) or more per month required to deduct tax at 5% of rental amount
  • Tax can be deducted and deposited in a single installment at the end of the financial year or at the end of the lease period, whichever is earlier
  • Tenant, after deducting and depositing the tax, must download TDS certificate (Form 16A) from TRACES website and provide the same of the owner
  • Unlike other tax deductors, in case of individuals deducting tax on rent, there is no requirement to register as a deductor with income tax department and obtain a TAN number. Using its PAN, the tenant can deposit the TDS and generate Form 16A from TRACES
Our News - Sep 2019
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