Section 194IB – TDS on Rent (for Individuals & HUF)

Effective from 1st June 2017, individuals & HUF not covered under tax audit have been subjected to deduct tax at source for rent payments if it is Rs. 50,000 or more per month.

Salient features:

  • Applicable only to individuals & HUF who are not under tax audit (under section 44AB)
  • This section is applicable from 1st June 2017
  • Tax Account Number (TAN) not required for the deductor
  • Applicable to monthly Rent of Rs. 50,000/- or above
  • TDS @ 5% if rent receiver is holding PAN, or otherwise TDS would be @ 20%
  • Deduction of Tax is to done in the last month of previous year (i.e. March) or in the month when the premises is vacated
  • Deposit to be made within 30 days from the end of month when tax was deducted. As an illustration, if deduction was in March, it should be deposited by 30th April or if deduction was in December, it should be deposited by 30th January
  • The deducted tax is to be deposited in the newly introduced Form No. 26QC through electronic means to one of the authorized banks
  • TDS Certificate (Form 16C) downloaded from TRACES is to be issued

Relevant resources:

Section 194IB

Notification dated 8th June 2017 with formats of Form No. 26QC & Form No. 16C

What is form26QC?

What is form 16C?

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What is form 16C?

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Form 16C is the newly introduced TDS certificate to be issued by rent payer (deductor) i.e. individuals & HUF’s who are not under Tax audit (under section 44AB) and does not have a Tax Account No. (TAN), paying a rent of Rs. 50,000/- or above per month, to the rent receiver (deductee) as per section 194IB of the Income Tax Act.

This TDS Certificate (Form 16C) needs to be downloaded from the TRACES website (www.tdscpc.gov.in) after the TDS amount has been deposited using Form 26QC. Issuing Form 16C to the landlord by the tenant acts a proof of TDS paid.

Form 16C contains details of the deductor and deductee with respective PANs, certificate number, financial year of deduction, unique acknowledgement number, amount paid, date, amount of tax deducted and deposited.

Format for Form 16C

What is form 26QC?

Section 194IB – TDS on Rent (for Individuals & HUF)

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FAQ on Late TDS payment

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What is the Late payment interest?

When deductor deposits the TDS after due date of deposit, it is a case of late payment and interest will be charged accordingly.

What is the Interest Rate for Late Payment?

  • Prior to 1st July 2010-1% per month
  • After 1st July 2010-1.5% per month

What is the procedure of calculating interest on Late Payment?

Late Payment interest is calculated @ 1.5% per month or Part of the month from the date of deduction +1 day till date of Deposit.

Late TDS payment

Procedure of calculating Late Payment:

Calculation

No. of months in Defaults = 3 i.e., 4-Mar-12+1 day to 12-May-12

4000*1.5%*3(Months) =180.00

What should I do in case of Late Payment Intimation Received?

Follow the steps mentioned below:

  • The default amount will have to be deposited through challan number ITNS – 281 by ticking minor head ‘400’
  • Add Challan to statement (C9 correction) using “Online Correction Functionality” available on TRACES as C9 correction has been stopped in Offline Correction
  • For closure of late payment default, fill up the fee amount in “interest” column in challan details through Online Correction by clicking on “Request for Correction” under “Default” tab and select Pay 220/LP/LD/LF/ Interest u/s 220 category
  • Please note that once the challan is added to the statement using the “Online Correction Functionality” further corrections can also be done by downloading latest Conso File
  • Note: In case of paper return, interest amount should be mentioned in annexure

What are the facts that should be considered for calculating Late payment interest raised by TDSCPC? 

Interest is calculated as per sec. 201 (1A) (ii) of IT act 1961, considering the below mentioned facts:

  • Interest is charged from date on which such tax was deducted to the date on which such tax was actually paid
  • Interest is chargeable for every month or part of the month on the amount of such tax.
  • A month is considered to be a calendar month as per general clauses act

What is the due date for the Quarterly deposit of TDS in special case under rule 30(3)?

Quarterly date of deposited of TDS:-Q1 (Apr to Jun) – 7th July, Q2 (Jul to Sep)- 7th OCT, Q3 (Oct to Dec)- 7th Jan, Q4 (Jan to Mar)- 7th April (Non-Govt.) and 30th April (Govt.)

If Extension is given, and then the Due date of Deposited will be considered from?

Late Payment interest will be calculated from the date of deduction but eligibility for extension will be considered from the date of payment/credit.

What is the additional Late Payment Interest?

Additional late payment will arise, while in correction statement, deductor has added new deductee rows and has given credit to deductee against newly paid challan or modified Date of Deduction or have made changes in any unmatched challan against which the TDS payment made.

Source: TRACES

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7th November – due date for TDS & TCS payment for October

7th November, 2019 is the due date for TDS and TCS payments for the deductions made in October 2019. Make sure to do the needful on time to avoid interest. To understand the details / calculations for late payment interest click on the links below.

Calculation of Late Payment Interest

Interest on Late Payment of TDS

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