How to pay Tds on rent above Rs 50000 using Form 26QC and Form 16C
From June 1, 2017, An individual or HUF paying rent of more than Rs 50,000 per month is now required to deduct tax at source (TDS) @ 5% on rental payments and to deposit it within the prescribed time. This article talks in detail about TDS on rent above Rs 50000, How often one has to pay TDS on rent above Rs 50,000, shows Form 26QC and Form 16C .
Overview of How to pay TDS on Rent above Rs 50000
The Finance Act, 2017 inserted a new provision, Section 194IB in the Income Tax Act under which, any person (including Individual/HUF to whom requirement of tax audit is not applicable) paying rent of Rs 50,000 or more per month must deduct TDS at 5% effective from 1 June 2017 (01.06.2017)
It is for the Commercial and residential property.
Amount on which tax needs to be withheld is Total annual rent paid to resident landlord.
The landlord is required to provide his PAN to the tenant In the absence of PAN or failure to provide the same, tax shall be withheld/deducted @20%. However, the overall tax in such a scenario shall be restricted to the rent payable for the last month of the financial year or tenancy whichever is earlier.
Tenant is required to deduct and deposit the taxes through a challan-cum-statement Form 26QC
Form 26QC to be filed 30 days from the end of the month in which TDS deducted.
Form 26QC can be filled online at tin-nsdl or offline by visiting the authorised banks.
The tenant would also be required to issue a tax withholding certificate, Form 16C, to the landlord, as a proof that taxes have been deposited in his name. Form 16C, TDS Certificate To be provided within 15 days from the due date for furnishing Form 26QC.
Delay in filing of Form 26QC may attract a late fees of Rs. 200 per day.
Also there maybe consequential penalties for non- filing.
For delay in issuing Form 16C, the penalty is Rs. 100 per day.
Why TDS on rent above Rs 50000 using Form 26QC?
The government’s objective of introducing this section appears to be primarily to ensure that correct income is disclosed and both, tenant and landlord file their income tax returns to reflect true disclosures. With the quoting of the PAN for both landlord and the tenant, the Revenue department can easily track correct disclosures of rent in tax returns. Also, such taxes are likely to get reflected in the 26AS form of the landlord for claiming credit of the TDS.
How often one has to pay TDS on rent above Rs 50,000
According to rule, Taxpayer/Tenant should furnish challan-cum-statement in Form 26QC
At the end of the FY or in the month when the premise is vacated / termination of agreement. However, taxpayer has to mandatorily file the Form at the end of each Financial Year (in case the agreement period contains more than one FY and rent has been paid/credited during the year)
How will transactions of joint parties (more than one tenant/landlord) be filed in Form 26QC?
Online challan-cum-statement in Form 26QC is to be filed by each tenant for unique tenant-landlord combination for respective share. What is Fee in Form 26QC and when is it applicable?
As per section 234E of the Income-tax Act, 1961 read with Rule 31A (4B) of Income-tax Rules, 1962, failure on part of deductor (tenant/lesse/payer) to furnish challan-cum-statement in Form No. 26QC electronically within 30 days from the end of the month in which the tax deduction is made will attract levy of fee for default in furnishing statement at the rate of`.200 for every day to be paid by the deductor (tenant/lessee/payer).
Please follow the steps to pay tax online:-
Step 1 Go to NSDL e-Gov-TIN website (www.tin-nsdl.com)
Click on the option “Online form for furnishing TDS on Rent (Form 26QC)”.
Select Form 26QC (Payment of TDS on Rent of Property)
Step 2 After selecting the form you will be directed to the screen for entering certain information.
a) Permanent Account Number of the Tenant and Landlord
b) Address of the Tenant and Landlord as well as the Property being let out
c) Financial Year will be populated on the basis of Date of Payment/Credit selected in the Form.
d) Major Head Code – Indicates the type of tax applicable viz; Corporation Tax (Companies)/ Income Tax (Other than Companies) will be populated based on Landlords PAN
e) Total Value of Rent Payable
f) Period of Tenancy
g) Date of Payment/Credit
h) Date of Deduction
i) Amount Paid/Credited
j) TDS Amount
k) Select the option for “Payment of taxes on Subsequent Date”
It is important to ensure that PAN of Tenant and Landlord are correctly mentioned in the form. There is no online mechanism for subsequent rectification. Deductor will have to approach the TDS – Assessing Officer or CPC-TDS for rectification of errors.
Step 3
After entering all the above detail, click on PROCEED button. The system will check the validity of PAN. In case PAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.
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