Zeal Consultancy - Blog #TDSZeal Consultancy - Blog #TDShttps://www.zealconsultancy.co.in/blogs/tag/tdsWed, 22 Apr 2026 17:46:31 +0530http://zoho.com/sites/<![CDATA[Understanding Section 194IB: TDS on Rent Payments Explained]]>https://www.zealconsultancy.co.in/blogs/post/understanding-section-194ib-tds-on-rent-payments-explainedIn the realm of income tax regulations, it's crucial for individuals and Hindu undivided families (HUFs) to grasp the nuances of Section 194IB. This s ]]>

In the realm of income tax regulations, it's crucial for individuals and Hindu undivided families (HUFs) to grasp the nuances of Section 194IB. This section of the Income Tax Act, 1961, pertains to the deduction of tax at source (TDS) on rent payments exceeding ₹50,000 per month. Let's delve into the details to understand who is liable, when to deduct TDS, the applicable rates, and recent amendments.

Who is Liable to Deduct Tax?

Section 194IB mandates that any individual or HUF, not covered under Section 194I, who pays rent exceeding ₹50,000 per month to a resident during a financial year, must deduct income tax at the prevailing rates. Moreover, individuals covered under sections 44AD and 44ADA, with turnovers not exceeding ₹3 crores and ₹50 lakhs for business and profession respectively, fall under this purview. The recent amendments have increased the turnover limits from ₹2 crores to ₹3 crores for businesses and from ₹75 lakhs to ₹50 lakhs for professions.

When to Deduct TDS?

TDS should be deducted at the time of crediting the rent for the last month of the previous year or the final month of tenancy, whichever occurs first. This deduction occurs either during the credit of rent to the payee's account or at the time of payment, through cash, cheque, draft, or any other mode.


TDS should be paid within 30 days from the end of the month in which TDS is deducted.

TDS Rate under Section 194IB

Under Section 194IB, tax must be deducted at a rate of 5% by the tenant, payer, or lessee at the time of rent payment to the lessor, landlord, or payee. The deducted tax amount must be deposited into the Government Account through authorized bank branches. 


Notably, obtaining a TAN No. (Tax Deduction and Collection Account Number) is not required for those deducting tax under this section. In cases where tax deduction is necessitated under sections 206AA or 206AB, the deduction amount cannot exceed the rent payable for the last month of the previous year or the last month of tenancy, as applicable.

Additional Considerations

- Form No. 26QC, a challan-cum-statement, needs to be submitted.

- The person deducting tax is mandated to issue a TDS certificate in Form 16C within the specified due dates.

- TDS under Section 194IB is only applicable for payments made to residents; payments to non-resident owners are exempt.

- Both resident and non-resident tenants are liable to deduct TDS under Section 194IB.

- Whether for residential or commercial purposes, rent payments exceeding ₹50,000 for any month within a year trigger TDS obligations.

Illustration 1

Mr. Mukesh, a salaried employee, pays rent of ₹62,000 per month to Mr. Ishaan during the financial year 2023-24. Is TDS deduction required?
- Yes, Mr. Mukesh is liable to deduct tax at source at a rate of 5% on such rent payments exceeding ₹50,000 per month. Thus, ₹37,200 (₹62,000 * 5% * 12 months) should be deducted from the rent payable for the entire financial year.

If Mr. Mukesh vacates the premises on November 30, 2023, he is still liable to deduct TDS for the months he occupied the property. 
- The tax for November 2023 would be ₹24,800 (₹62,000 * 5% * 8 months).

In the scenario where Mr. Mukesh vacates the premises on March 31, 2024, but Mr. Ishaan fails to provide his PAN.
- Then tax of ₹1,48,800 (₹62,000 * 20% * 12 months) or the rent of that month, ₹62,000, whichever is less, should be deducted from the rent payable for March 2024.

Illustration 2

Turnover of Mr. Dhoni in the financial year 2022-23 was ₹2.25 crores. 
In the financial year 2023-24, his turnover was ₹2.5 crores. He pays rent of ₹60,000 per month. Which section should TDS be deducted under (194I(b) or 194IB)?
(It's noteworthy that the limit for section 44AD and 44ADA has been increased from ₹2 crores to ₹3 crores for business and ₹75 lakhs to ₹50 lakhs for profession, respectively).

For the financial year 2022-23, TDS should be deducted under section 194I(b) as Mr. Dhoni's turnover in the preceding financial year exceeded ₹2 crore. This implies that TDS should be deducted at a rate of 10% if the rent paid during the year exceeds ₹2.40 lakhs. 

For the financial year 2023-24, TDS should be deducted under section 194IB as Mr. Dhoni's turnover in the preceding financial year was below ₹3 crore. Hence, TDS should be deducted at a rate of 5% on the rent payments exceeding ₹50,000 per month.

Conclusion

Understanding Section 194IB is essential for individuals and HUFs engaged in renting properties. Compliance with TDS regulations not only ensures adherence to legal requirements but also contributes to a transparent tax system. 


To know more you can Schedule a consultancy by clicking on the below tab.

Schedule a Consultancy
]]>Fri, 26 Apr 2024 12:02:07 +0000<![CDATA[Why Many Taxpayers Still Find the Old Tax Regime Attractive: 8 Compelling Reasons]]>https://www.zealconsultancy.co.in/blogs/post/why-many-taxpayers-still-find-the-old-tax-regime-attractive-8-compelling-reasonsWhen determining how to calculate your taxes, the choice between the old and new tax regimes can significantly impact your financial outcome.]]>

Exploring Tax Options: Old vs. New Regime

When determining how to calculate your taxes, the choice between the old and new tax regimes can significantly impact your financial outcome. While the new tax regime boasts lower income tax rates, the old tax regime offers a plethora of avenues for claiming higher income tax exemptions and deductions. Let's delve into why the old tax regime remains a compelling choice for many taxpayers in specific income brackets.

1. Higher Deductions and Exemptions

Under the old tax regime, taxpayers can benefit from various deductions and exemptions, substantially reducing their taxable income. This is particularly advantageous for individuals eligible for specific deductions.

2. Tax Saving and Investment Opportunities

The old tax regime provides a dual advantage of tax savings and investment incentives. Encouraging regular investments, this regime rewards taxpayers through tax-saving instruments such as PPF or ELSS, offering deductions of up to Rs 1.5 lakh under Section 80C.

3. Affordable Financial Protection

Paying premiums for insurance policies can lead to significant deductions under the old tax regime. Taxpayers can claim deductions of up to Rs 1.5 lakh for life insurance premiums under Section 80C, along with additional deductions for health insurance premiums.

4. Retirement Planning Benefits

Investing in the National Pension System (NPS) through your employer can substantially lower your taxable income. The old tax regime presents broader opportunities for tax savings through NPS contributions.

5. Tax Benefits on Allowances

Those receiving House Rent Allowance (HRA) or Leave Travel Allowance (LTA) can benefit from substantial tax savings under the old tax regime. HRA can reduce taxable income significantly, especially in metro areas, while LTA offers exemptions for travel expenses.

6. Cost-Effective Asset Acquisition

For individuals acquiring assets such as homes through loans, the old tax regime provides deductions on interest payments. Home loan borrowers can claim up to Rs 2 lakh deduction under Section 24(b) for interest payments.

7. Various Other Deductions

The old tax regime includes deductions under various sections, such as 80G for donations, 80TTA for interest on savings accounts, and specific exemptions for senior citizens.

8. Building Wealth Through Tax Savings

Maximizing tax savings can contribute significantly to wealth creation. Eligible taxpayers, with multiple deductions and exemptions, can benefit greatly from the old tax regime, resulting in substantial tax savings.

Conclusion

For individuals with considerable deductions under various sections of the Income Tax Act, sticking to the old tax regime often leads to higher tax savings. However, if your circumstances do not allow for significant deductions, the new tax regime might offer a simpler and more beneficial option. It's crucial to carefully evaluate your specific financial situation before making a decision.

Considerations

Take caution when considering changing tax regimes frequently, as there are restrictions on how often you can switch. While those without income from business or profession can choose between regimes each financial year, taxpayers with business or professional income have limited options.

Understanding the benefits and drawbacks of both tax regimes is essential for making an informed decision that aligns with your financial goals and circumstances.

To know more, get in touch by clicking on the below tab.
Get Started Now
]]>Tue, 09 Apr 2024 14:17:22 +0000<![CDATA[Everything about Tax Deducted at Source (TDS)]]>https://www.zealconsultancy.co.in/blogs/post/Everything-about-Tax-Deducted-at-SourceStory of subtracting taxes from the recipient's income for remittance to the Government]]>

Tax Deducted at Source

Introduction​


The concept of Tax Deducted at Source (TDS) was introduced to collect taxes directly from the source of income. Under this concept, a person (deductor) responsible for making specified payments to another person (deductee) is required to deduct tax at the source and remit the amount to the Central Government. The deductee, from whose income tax has been deducted at source, can claim credit for the deducted amount based on Form 26AS or the TDS certificate issued by the deductor.

Entities, both corporate and non-corporate deductors, making payments specified under the Income Tax Act to third parties (deductees) must deduct Tax Deducted at Source (TDS) from these payments. The deducted tax is then deposited at designated branches of banks authorized to collect taxes on behalf of the Government of India. Additionally, deductors are required to furnish TDS returns electronically containing details of the deductees and challan details related to the deposit of tax to the Income Tax Department (ITD).

You can edit text on your website by double clicking on a text box on your website. Alternatively, when you select a text box a settings menu will appear. your website by double clicking on a text box on your website. Alternatively, when you select a text box

Forms prescribed for filing TDS returns depending upon the nature of the TDS deduction

FORM PARTICULARS
Form 24Q
The quarterly statement for tax deducted at source (TDS) from “Salaries.”
Form 26Q
The quarterly statement for tax deducted at source in respect of all payments except ‘salaries.’
Form 27Q
Quarterly statement of deduction of tax from interest, dividend, or other sum payable to non-residents or foreign companies.
Form 26QB
Statement of TDS deducted against the payment made for immovable property.
Form 26QC
It is a challan cum statement of deduction of tax u/s 194-IB against the tax deducted on the rent of the property.
Form 27EQ
Quarterly statement of collection of tax at source (TCS)

Form 24Q

Form 24Q is a quarterly statement used for deducting tax at source from employees' salaries, as per Section 200(3) of the Income Tax Act. 

Employers, acting as deductors, file this statement and include details like PAN (Permanent Account Number) of both the employer and employee, salary specifics, TDS details, and other relevant information. Submission of Form 24Q to the Income Tax Department is mandatory for employers, ensuring accurate reporting of TDS on salary payments. Compliance with filing this form every quarter is essential for employers.

Form 26Q

Form 26Q is a quarterly statement that shows the deduction of taxes according to sections 200(3), 193, and 194 of the Income-tax Act. It covers payments other than salary for the specific quarter. 

The form includes details such as challan information, information about the deductor and deductee. If the deductor has not deducted or deducted at a lower rate, the form requires reasons to be provided.

TDS under below sections are covered in Form 26Q:
SectionNature of Payment
193Interest on securities
194Dividend
194AInterest other than interest on securities
194BWinning from lotteries and crossword puzzles
194BBWinnings from horse race
194C
Payment of contractor and subcontractor
194DInsurance commission
194EE
Payment in respect of deposit under (NSS) national saving scheme
194FPayments on account of repurchase of units by mutual funds or UTI
194GCommission, prizes, etc., on sale of lottery tickets
194HCommission or brokerage
194IRent
194JFees for professional or technical services
194LAPayment of the Compensation on acquisition of certain immovable property
194LBACertain income from compensation on acquisition of certain immovable property
194DAPayment in respect of life insurance policy
194LBBIncome in respect of units of investment fund
194IAPayment on transfer of certain immovable property excluding agriculture land
194LCTDS on income by way of interest from an Indian Company or a business trust
194LDTDS on income by way of interest on certain bonds and Government Securities
194LBCIncome in respect of investment in securitization trust
192APayment of accumulated balance due to an employee from the trustees of the Employees’ Provident Fund Scheme, 1952
194NTDS on cash withdrawal in excess of Rs 1 crore
194MTDS on payment to resident contractors and professionals
194OTDS on E Commerce Transactions under Section 194O with effect from 01st April 2020

Form 27Q

Form 27Q is a quarterly report that outlines the deduction of taxes under section 200(3) of the Income Tax Act. It applies to payments, excluding salary, made to non-residents and foreigners during a specific quarter. The income sources subject to TDS deduction include interest income, bonuses, and other amounts owed to NRIs.

Form 26QB

According to Section 194-IA of the income tax act, TDS applies when selling immovable property for more than Rs 50 lakhs. The buyer deducts 1% tax and pays it to the seller. This rule doesn't apply to transactions involving agricultural land. 

TDS, along with Form 26QB, must be submitted within 30 days from the month-end when TDS was deducted. The person deducting TDS provides Form 16B to the payee within 15 days from the due date of filing Form 26QB.

Form 26QC

Under Section 194IB, individuals and HUFs renting properties above Rs 50,000 must deduct 5% TDS annually. This TDS is to be paid within 30 days of deduction, using Form 26QC. 

The taxpayer/tenant needs to provide Form 26QC in two cases: at the end of the fiscal year or when vacating the premises/terminating the agreement, especially if it falls within the same fiscal year.

Due Dates of filing TDS return form

TDS return due dates vary by quarter in a financial year. Here are the due dates for filing 24Q, 26Q, and 27Q:
Quarter Due date
April to June
31st July
July to September
31st October
October to December
31st Jan
January to March
31st May
Due date of filing of Form 26QB:

The property buyer, known as the deductor, must file Form 26QB online—a combined payment and declaration statement. This form needs to be submitted within 30 days from the end of the month in which the payment or deduction occurred. There is no need to file a separate TDS return for this deduction.

Due date of filing of Form 26QC:

Pay your tax online using Form 26QC within 30 days from the end of the financial year or the day the property is vacated. For example, if tax is deducted in March, the deadline to deposit the tax and file 26QC is April 30, 2020.

Due date of furnishing of Form 27EQ:
Quarter Due date
April to June
15th July
July to September
15th October
October to December
15th January
January to March
15th May

Consequences of filing late TDS return



Failing to submit the TDS return by the due date incurs a penalty of Rs 200 per day until the issue is resolved. The penalty, however, cannot exceed the total TDS amount.

TDS certificate & due date of issuing TDS certificate

A TDS certificate is required to be issued by the person deducting TDS to the assessee from whose TDS was deducted.

 

Different TDS certificates and their due dates are as follows:-

Form no. Description
Periodicity
Due date
Form No. 16
TDS from salary
Annual
On or before June 15 of the financial year immediately following the financial year in which tax is deducted or such date to be extended by the income tax department
Form no. 16A
TDS from other than Salary
Quarterly
Upto 15 days from the due date of furnishing quarterly TDS returns
Form No. 16B
TDS u/s 194-IA
 Within 15 days from the due date of furnishing challan in Form No. 26QB
Form No. 16C
TDS u/s 194-IB
 

Within 15 days from the due date of furnishing challan in Form No. 26QC

I hope this guide provided a helpful overview of TDS returns, forms and deadlines. If you find filing TDS returns confusing or intimidating, consider seeking professional help. You can contact us at 9930623006 or admin@zealconsultancy.co.in

]]>Wed, 31 Jan 2024 14:52:01 +0000