Tax Deducted at Source on Rent

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Tax Deducted at Source on Rent

Section 194-I

As defined under section 194-I

“Rent” means payment under any lease, sub-lease, tenancy or any other arrangement or agreement for the use of any of the following, separately or together:

  • Land
  • Building
  • Land appurtenant to a building.
  • Machinery
  • Plant
  • Equipment
  • Furniture
  • Fitting

TDS is required to be deducted by every person other than individual & HUF for any payment of rent to resident exceeding amount Rs 180000. Individual and HUF, who are covered under section 44AB are also required to deduct TDS on rent.

TDS Rate:

  • 2% for rent of plant & machinery.
  • 10% for rent of land, building, furniture, fixture.

TDS is required to be deducted at the time of payment or at the time of credit to the account whichever is earlier.

Section 194-IB

Section 194-IB is inserted with effect from 1st June 2017.

As defined under section 194-IB

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

Every individual & HUF other than covered under section 44AB is required to be deduct TDS on rent paid to resident for amount exceeding Rs 50000 per month.

The TDS shall be deducted at the last month of the year or the month in which the property is vacated whichever is earlier.

Further the provision of section 203A is not applicable to person required to deduct TDS under this section i.e. there is no requirement to have Tax deduction Account Number (TAN)

Where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy.

Under section 206AA any person entitled to receive any income on which TDS is required to be deducted shall furnish Permanent Account Number (PAN),if failed to furnish Permanent Account Number (PAN) than  tax is required to be deducted at higher of the following:

  • Tax rate specified in the relevant provision of the act or
  • At the rate of 20%
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