Friday, 10 February 2017

TDS Rent Payment exceeding Rs. 50k

  TDS  Rent Payment exceeding Rs. 50k


Budget 2017 proposed to imposed TDS deduction liability on individual or a HUF (other than those liable for tax audit) for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of month during the previous year , shall deduct an amount equal to five per cent. of such income as income-tax thereon.

New Section 194-IB inserted

Ø  Applicable: - Individual or an HUF for rent payment exceeding Rs. 50,000 for a month or a part of month during the previous year.

Ø  Rate of TDS :- 5%

Ø  Deduction of tax :- at the time of credit of rent, for the last month of the previous year or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

Ø  It is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN) as per section 203A of the Act.

Ø  It is also proposed that the deductor shall be liable to deduct tax only once in a previous year.

Ø  It is also proposed to provide that where the tax is required to be deducted as per the provisions of section 206AA(where PAN number of the deductee not furnished i.e at a rate of 20%), 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, as the case may be.


     Salaried employee who are claiming HRA and showing payment of rent of more than Rs. 50,000/-  per month have to compulsory deduct TDS of 5%.


The amendment will be effective from 1stJune 2017.

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