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TDS on Rent – Section 194-IB w.e.f 1st June 2017

Bare Act wordings


[Payment of rent by certain individuals or Hindu undivided family.

194-IB. 

(1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.
(2) The income-tax referred to in sub-section (1) shall be deducted on such income 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.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
(4) In a case 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, as the case may be.
Explanation.—For the purposes of this section, "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.]

Persons required to deduct TDS under Section 194IB

  1. Individual and HUF who are not required to get his accounts audited under section 44AB.
  2. Individual and HUF who are required to get his accounts audited under Points (c), (d) or (e) of section 44AB.
In other words  only individuals and huf who are required to get his accounts audited due to turnover or gross receipts higher than specified limits are not covered under this section, all other individuals are covered in this section.
Individuals and HUF not covered under this section (as mentioned above), company, partnership firm, AOP and  BOI are required to deducted TDS from rent under section 194I.

Payment Covered

Payment of rent to a resident for land or building exceeding Rs. 50,000 per month is liable for tax deduction. Payment of rent paid or payable after 1st June 2017 are covered  only.

TDS Rate

TDS is deductible at the rate of 5% of the rent paid or payable. If the person receiving rent doesn’t furnish his PAN then TDS is deductible at the rate of 20% subject to maximum limit of amount of rent payable for the month of march or last month of tenancy as the case may be.

Time of Deduction

TDS is to be deducted only one time in a year and not in every month. TDS is to be deducted at earlier from the following
  1. Time of credit of rent to the account of payee for the month of march or the last month of tenancy, if property is vacated during the year as the case may be.
  2. Time of payment of rent to payee for the month of march or the last month of tenancy , if property is vacated during the year as the case may be.

TAN number Not required

TAN number is not required by such person to deduct and deposit TDS.

Flow Chart on Section 194-IB



   With Warm Regards, 

   NILAY SHAH
   (CA, CS, B.com)
   Mobile : 
+91 - 73-83-13-5553    Website: www.canilayshah.com 


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