TDS concept requires the responsibility of the person on whom it has been cast, on whom to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient. The sum deducted is to be deposited to the credit of Central Govt. The recipient on whom the Income Tax is Deducted at Source gets the credit of the amount deducted in his personal assessment will receive a certificate issued by the Deductor. Here the Assessee can check details about TDS on Rent and at which rate it is taxable on the Income and how to calculate TDS on rent, TDS on Rent Limit, Due Dates, etc.
TDS on Rent – Section 194I
Any person (not being an individual or a Hindu Undivided Family) who is responsible for paying rent to a resident is liable to deduct TDS. Tax is Deducted at Source if in case the aggregate of the amount of such income paid or credited or likely to be credited or paid during the Financial Year (FY) by the same person to the account of, or to payee exceeds Rs. 1,80,000/-. No tax is deductible if the amount of rent paid or credited during the FY does not exceed Rs. 1,80,000/-.
Rent is Defined in Section 194I
Here Rent is defined as any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any:
a) land; or
b) Building (including factory building); or
c) Land appurtenant to a building (including factory building).
d) Machinery; or
e) Plant; or
f) Equipment; or
g) Furniture; or
h) Fittings; or
whether or not the payee owns any or all of the above.
Essential Features of Rent
As per the above definitions, these are following essential features of Rent
- Payment is made under any lease, sub-lease, tenancy or any other agreement or arrangement.
- Payment is made either for the use of only land or building and with the effect from 13th July 2006 TDS provisions will also be applicable in respect of rent paid or payable of machinery, plant, equipment, furniture or fittings.
- It is immaterial whether or not such asset is owned by the person to whom rent is paid.
TDS Rate on Rent under Section 194I
Tax is Deductible at Source under Section 194I at the following rates:
|S.no.||Nature of Payment||TDS Rate|
|1.||Rent of Plant Machinery or equipment.||2%|
|2.||Rent of Land, Building or furniture to an individual and Hindu undivided family.||10%|
|3.||Rent of land, Building or furniture to a person other than an individual or Hindu Undivided Family.||10%|
TDS is Deductible in the Following cases
Tax is deductible in the following cases according to the respective conditions
- Tax is Deductible on payment of non-refundable deposit.
- Advance Payment of Rent.
- Warehousing Charges.
- Tax deductible on rent of a part of the building.
- Tax is attracted under Section 194I for landing & parking charges paid by an airline to Airport Authority of India (AAI).
- Payments made to a hotel will be in the nature of rent and subjected to tax deduction under section 194I.
- Tax is deducted if Payments under a composite agreement.
- Income from letting out of Factory Building.
- Tax deductible for hiring of storage tanks.
- Tax is Deductible on service charges related to fixtures of rented house.
No Deduction for TDS on Rent in Certain Cases
Where aggregate amount of rent does not exceed Rs. 180000/- then no tax is deducted. Tax is not deducted in the following cases:
- No tax is deducted for Clearing and Forwarding (C&F) agents.
- No tax Deductible on Payments for Cold Storage.
- No tax Deductible on Rent including Municipal Tax, Ground Rent.
- No tax Deductible on Payments made to funds established for the benefit of Armed Forces.
- No tax Deductible on Payments by an individual to a hotel which is reimbursed later by the company.
- No tax Deducted for sharing of proceeds from film exhibition between film distributor and film exhibitor owning a cinema theater.
- No tax is Deductible under section 194I on payments to owners of a hoarding site.
- Roaming charges regarded as rent are not deductible.
- No Tax is deductible on payments made for Transmission of Power.
- No tax is deductible where the payee belongs to Government or local authorities.
Deduction at Lower Rate under Section 194I
On application by the Payee in Form no. 13, if the Assessing Officer (AO) is satisfied that this total income justifies no deduction of tax or deduction at the lower rate, then the AO may issue a certificate in Form No. 15AA to that effect directly to the taxpayer.
Due date for Payment of Tax
|S.no.||Nature of Payment||Due Date|
|1.||Where the payment is made by or on behalf of the Government.||On the same day (without using any challan form).|
|2.||Where the payment is made in any
other case than the Government
|On or before 7 days from end of month in which deduction is made where tax is paid accompanied by an Income-tax challan.|
|If the amount is credited or paid in the month of March||On or before April 30th|
|In any other case.||On or before 7 days from the end of the month in which the deduction is made.|
Issue of TDS certificate
TDS certificates are to be issued on quarterly basis in Form No.16A in case of payments other than salary. Every person responsible for deduction of tax from payments other than salary as per rule 31 has to issue a quarterly TDS certificate in Form No. 16A. The certificate is to be issued by following dates:
|Quarter||Due date for NonGovernment deductor||Due date for Government deductor|
|April to June||30th July||15th August|
|July to September||30th October||15th November|
|October to December||30th January||15th February|
|January to March||30th May||30th May|
Faq’s Related to TSD on Rent
When is Tax Need to be Deducted at Source?
Tax is to be Deducted at Source at the time of credit of income by way of rent to the account of the taxpayer or at the date of payment thereof in cash or by the issue of a cheque or DD or by any other mode or whichever is earlier.
Who is responsible for deduction of tax?
Any person responsible for making payment of rent to a resident is responsible to deduction of tax under section 194I.
But provisions of Section 194I are not applicable to an Individual or HUF whose books are not required to be audited under Section 44AB during the immediately preceding Finacial Year.
Is PAN Card is Required to pay TDS on Rent?
Yes PAN Card is mandatory for the Payer as the Receiver of Rent shall intimate his PAN Card Number to the Party from whom he is receiving the Payment. If the PAN Card Number has not been intimated then TDS on Rent shall be deducted at the rate 20% under Section 206AA.