What is Section 194I?
The individual (not being an Individual or HUF) who is responsible for paying rent is liable to deduct the charge at the source.
TDS threshold for deduction of duty on rent is Rs 2,40,000 for the FY 2020-21. The threshold limit was Rs. 1,80,000 until FY 2018-19. Additionally, individuals and additionally HUFs who are liable to burden review are likewise under an obligation to deduct the expense at the source.
- In different countries also, such pay is dependent upon deduction of personal duty at source
What is the Meaning of ‘Rent’ concerning Section 194I?
‘Rent’ signifies any installment, by whatever name called, under any rent, sub-rent, tenure, or some other understanding or game plan for the utilization of (either separately or together) any:
- land or
- Building (counting industrial facility building) or
- Land appurtenant to a structure (counting manufacturing plant building) or
- Machinery or
- Plant or
- Equipment or
- Furniture or
- Fittings
regardless of whether any or the entirety of the above are possessed by the payee (Explanation (I) to Sec. 194-I). Sub-letting is likewise covered.
If the landlord gathers security or settlement ahead of time at the hour of letting out a structure to an inhabitant relying on the prerequisite that the store will be refunded at the hour of vacating the structure, at that point such a receipt isn’t in the idea of pay and, in this way, no duty is to be deducted at source under section 194I.
Nonetheless, advance rent (not in the form of refundable security store) paid is subject to a duty deduction. Additionally, where any such rent is credited to the ‘anticipation account’ or some other record will likewise be liable to deduct charge at the source.
TDS Rates on Rent u/s 194-I and 194-IB
| Type Of Rent | TDS Rate | Section Of IT Act | Explanation |
|---|---|---|---|
| Rent paid towards commercial/ industrial premises | 10% | 194-I | Tax to be deducted and deposited monthly |
| Rent paid towards residential premises leased by non-individual entities like companies | 10% | 194-I | Tax to be deducted and deposited monthly |
| Rent paid towards residential premises leased by salaried and self-employed individuals | 5% | 194-IB | Tax to be deducted and deposited once at end of financial year or end of the lease; TAN not required |
Who is Liable to Deduct TDS u/s 194I?
The individual (not being an Individual or HUF) who is responsible for paying any payment to a resident via rent is liable to deduct the charge at the source.
According to Budget 2017, individuals/HUF (not covered under charge review) paying rent to a resident exceeding Rs.50,000 each month is likewise liable to deduct TDS @ 5%. This amendment will be effective from 1 June 2017.
On the off chance that the total of the measure of such pay attributed/paid or liable to be credited/paid during the monetary year by the previously mentioned individual to the record of or to the payee surpasses Rs.2,40,000. The limit was Rs 1,80,000 until FY 2018-19.
Why bother of Deduction of TDS?
Expense is needed to be deducted at source at the hour of credit of ‘pay via rent’ to the record of the payee or the hour of installment, thereof, in real money or by the issue of a check or draft or by whatever other mode, whichever is prior.
What is the time limit on depositing TDS?
Where the installment is made by or for the Government around the same time (without utilizing any challan structure)
Where the installment is made in some other case then the Government-On or before 7 days from the end of the month in which deduction is made, where assessment is paid joined by an Income charge challan. If the sum is credited or paid in the long stretch of March-On or before April 30
In some other case-On or before 7 days from the month’s end in which the deduction is made. A citizen who is liable to deduct TDS will be liable to pay revenue @ 1% each month from the date when duty is deductible till the date when the assessment is deducted.
A citizen who has deducted charge yet not stored the equivalent to the government is liable to pay revenue @ 1.5% each month from the date when the assessment is deducted to the date of a store of the TDS.
FAQs
✅ What is section 194I?
Under Section 194I a person (other than Individuals and Hindu Undivided Family) who pays rent is liable for Tax deduction at source.
✅ What is the exemption limit for TDS on rent?
The TDS on Rent is not required to be deducted if the aggregate amount during the Financial Year doesn’t exceed INR 2,40,000.
✅ What is the difference between section 194I and 194IB?
We know that Section 194I only allows the Individuals / HUFs to pay the TDS who are audited under section 44AB. So, to bring out the individuals / HUFs who pay huge amounts of rent but still are not audited, Section 194IB came into existence in Budget 2017.