TDS On Rent u/s 194-IB, Filing Form 26QC Explained

This document covers

1. Background: Payment of Rent by certain individuals / HUF
2. What is Rent?
3. What is Section 194-IB?
4. What is Form 26QC & How to File Online?
5. What is Form 16C & Why you Care?

1. Background: Payment of Rent by certain individuals / HUF

It is very common for individual / HUF to pay rent for residential / office purposes. Budget 2017 has amended the TDS on Rent provisions and brought the section 194-IB w.e.f 01st Jun 2017, which is to cover renting a building / premises. If you come under this section, you may need to file your TDS using Form 26QC, refer below on applicability and how to File your TDS.

2. What is Rent?

Rent means any payment by whatever name called, under any lease, sub lease, tenancy, or any other agreement or arrangement for the use of land or building or both

3. What is Section 194-IB?

3.1 Applicability

Any individual or HUF other than those individual/HUF whose books are liable for tax Audit are required to deduct the TDS on the payment of rent.

3.2 Threshold Limit

TDS is required to be deducted if the rent per month or part of month exceeds Rs 50,000

3.3 Rates of TDS

The rate of TDS to be deducted on rent payable is 5%.

3.4 Time of Deduction

The TDS needs to be deducted on the following times whichever is earlier.

1. Credit of rent for the last month of the previous year or the last month of tenancy if property is vacated during the year (or)
2. Payment of rent in cash or bank

3.5 Requirement of TAN

TAN is not required for deduction of TDS u/s 194-IB

3.6 Deductee Details

PAN of Deductee (Landlord/Lessor etc) is required for the person paying rent. If there is no PAN of deductee, TDS needs to be deducted @ 20%. However, the total TDS should not exceed rent payable for last month.

Important: If the building / premises is owned by multiple owners, Form 26QC to be filled & paid for each Owner based on the % of ownership agreed or in the rental agreement.

3.7 TDS Return

The TDS deducted u/s 194-IB should be deposited to Government in Form 26QC (Challan cum Return)

4. What is Form 26QC & How to File Online?

Form 26QC is a challan cum return statement for reporting the transactions liable to TDS on Rent u/s 194-IB, which needs to be filed every following month after the payment.

Due Date: The Due date of filing Form 26QC is within 30 days from the end of month in which the tax deduction is made

For example, Mr Ram has paid the rent in the month of April 2021, he needs file form 26QC by May 30.

Form 26QC can be filed using https://www.incometax.gov.in/iec/foportal/

Required Details for Filing Form 26QC: The following are the required details

1. PAN and Name of Tenant
2. PAN and Name of Landlord
3. Address of Tenant and Landlord
4. Mobile No and email id of Tenant and Landlord
5. Address of Rented property
6. Period of Tenancy (No of Months)
7. Total Value of Rent payable
8. Amount of Rent paid in last month
9. Date of Payment and Date of tax Deduction
10. Type of Asset (Land / Building / Both)
11. Your Bank Payment Details to Pay

Important: It is advised to have all the above information handy before start filling the form as you have to complete within 30 mins from the start

Form 26QC is organised in the following manner

1. Taxpayer Info
2. Address
3. Property Details
4. Payment Info

5. What is Form 16C & Why you Care?

1. Form 16C is the TDS certificate to be issued by the deductor (Tenant of property) to the deductee (Landlord of property) in respect of the tax deducted and deposited as TDS on rent under section 194-IB.
2. Form 16C consists of Name and Address of Tenant, Landlord, Total Amount paid, TDS deducted, challan paid details, certificate number
3. Form 16C should be given to Landlord within 15 days from the date of filing Form 26QC