TDS on Rent of Property u/s 194IB : Form 26QC
It is very common for individual / HUF to pay rent for residential / office purposes. Under section 194-IB of the income tax act, if any individual or HUF to whom tax audit is not applicable makes payment of rent to a resident landlord exceeding Rs. 50,000 per month, then he/she needs to deduct TDS. And Form 26QC needs to be filed on TIN NSDL. TAN is not compulsory for filing this form. PAN of the tenant and PAN of the landlord is compulsory.
Who needs to file Form 26QC?
The tenant of the property, who is making rent payments to the resident landlord needs to file this form. TDS is deducted @ 5% on total rent payments made by the tenant.
When to file Form 26QC?
The due date of payment of TDS on rent is 30 days from the end of the month in which the deduction is made. However, the tenant can file Form 26QC within 30 days from:
- The end of the financial year or
- The day on which property is vacated/ rent agreement terminated.
For example: If the tenant has made payment of rent during the whole FY 2019-20, then the due date for filing Form 26QC is 30th April 2020. And if the tenant has vacated the place on 31st August 2019 during FY 2019-20 then the due date of filing Form 26QC is 30th September 2019.
How to file Form 26QC?
Go to TIN NSDL website,
Go to Services> Select TDS on Rent of Property.
Click on Online form for furnishing TDS on Rent of Property (Form 26QC)
From the left-hand site list.
Fill the details in the form
Details of Tenant, Landlord, Property, TDS etc needs to be added.
Make payment of TDS and save the acknowledgement
Payment can be made wither immediately or on a later date. An acknowledgment will be generated upon successful submission.
Submit Challan 26QC for Payment of TDS
The TDS deducted should be paid within 30 days from the end of the month in which the tax was deducted. It shall be accompanied by a challan (cum) statement in Form 26QC. The TDS so deducted can be paid to the government electronically through the Reserve Bank of India, State Bank of India, or any other authorized bank.
Furnish Form 16C as Certificate for TDS Deduction to Payee
Form 16C is a new TDS certificate introduced by the government of India. It reflects the amount of TDS deducted on rent @ 5 % by the individual/HUF (u/s 194IB). It is just like Form 16 or Form 16A issued in the case of salary and other payments respectively. The person deducting the TDS on the rent is required to furnish Form 16C to the payee within 15 days from the due date of furnishing challan cum statement in Form 26QC.
For instance:
Ajay, who is a salaried employee is paying a rent of Rs 60,000 per month. He deducted the TDS @5% for the whole year in the month of March. The amount of TDS comes out to be Rs 36,000 (5%*7,20,000). Now this TDS should be deposited along with Form 26QC before 30th April, i.e. within 30 days from the end of the month in which TDS is deducted. Also, Ajay should furnish the Form 16C to the landlord before 15th May, i.e. within 15 days from the due date of furnishing challan cum statement in Form 26QC.
For the FY 2020-21, due to COVID-19, the TDS rate under section 194IB is 3.75% for payments from 14 May 2020 until 31 March 2021. The TDS due for deposit in March under section 194IB consists of dues calculated at 5% until 14 May 2020 and at 3.75% for the rest of FY 2020-21. You can download form 16C or Form 26QC online from TRACES website.
Comparative view of Section 194-I & Section 194-IB
| Basis | 194-I | 194-IB |
| Applicability | It is applicable for any person (not being an Individual or Hindu Undivided Family) who in the last year liable to Tax Audit | This section is applicable on an individual or a Hindu undivided family who are not required to have tax audit as per Income Tax Act. |
| Trigger Limit | Rs. 2,40,000 Per annum | Rs. 50,000 per month or part of the month during financial year |
| TDS Rate | 10% | 5% |
| TAN requirement | TAN in required | No TAN is required, PAN is sufficient |
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Posted by Ramesh Kumar Gupta
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