Any Person liable to pay rent for more than 50000 per month are to deduct TDS @ 5%

Section Description Cutoff Rate of TDS
194-IB Rent Paid  50000 PM 5%

hence,even Salaried Person payinfg Rent more than 50000 per month and claiming HRA has to deduct and pay TDS of the landlord

 

 

This TDS is to be deducted

Annually in last month (March)

or

last month of Rent Agreement.

 

Example 1

Suppose a person pays rent of 40000 per month to Landlord

Whether TDS to be deducted

View Answer

Example 2

Suppose a person pays rent of 100000 per month to Landlord

Whether TDS to be deducted

 -a-

Since this amount is more than 50000,TDS 194IB is applicable

TDS will be deducted annually (only one time in a year)

Rent Paid Annually=100000*12=1200000

TDS =5%*12000000=60000

Rent Paid in March will be 100000-60000=40000

(in all other months whole 100000 will be paid)

 -ea-

 

 Example 3

Person Stays in Rented House from April-July @ 100000 per month

Whether TDS to be deducted

View Answer

 

 

Note:-
This section is not applicable to those Rent which are covered under Section 194I

 

 

Difference between Section 194I and Section 194 - IB

 

 SECTION 194I SECTION 194IB

It is applicable for those business who in last year liable to tax audit

Example

Company

Proprietorship/Partnership having turnover > 2 cr in 2016-17

It is applicable in all other cases like

Small Business not liable to tax audit

Personal Rent of House for Salaried Individual

TDS Rate is 10% TDS Rate is 5%
Cut off is 180000 Per annum Cut off is 50000 Per Month
TDS is to be deducted Monthly TDS is to be deducted Annually in last month (March) or last month of Rent Agreement.
TAN No. Required to Deduct TDS  No Tan No. Required, Simple Pan No. Sufficient

 

Implication of Section 194-IB on Payroll and HRA

  • Many Employees who are claiming HRA through fake Rent Receipts
  • Those employees who are showing Rent receipts of more than 50000 p.m have now to deduct 5% TDS

 

 

 

  1. Tax Practical
  2. Practical TDS (Non Salary)

About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .