The duty to deduct TDS is on the person who makes such a payment. If the person fails to make such a deduction, he can be treated as a defaulter
In case you are paying a rent of Rs 50,000 to your landlord, you are supposed to deduct tax deducted at source (TDS) at two per cent under section 194-IB. Before October 2024, this was five per cent. While the threshold was Rs 20,000 per month or Rs 2,40,000 per year, before Budget 2025. In Budget 2024, it was raised to Rs 50,000 per month. The change comes into effect from April 1.
TDS Payment Requirement
Tenants must make the deduction and pay tax to the government once every financial year. The responsibility to deduct falls on the person who makes such a payment. If the person fails to make such a deduction, he can be treated as a defaulter.
The tenant must provide a TDS certificate and Form 16C when making this payment. Within 25 days from the due date of furnishing Form 26QC, this needs to be completed.
This is proof of the fact that the tax is deposited. The landlord can adjust tax liability by mentioning the full tax paid during filing the ITR and claiming the TDS already paid.
Penalty In Case TDS Is Not Deducted
In case tax is not deducted, there is a penalty that needs to be paid. The amount of tax deducted is equivalent to the penalty. Also, if there is a delay in the tax being deposited to the government, penal interest needs to be paid at 1 per cent for the delay in deducting the tax and 1.5 per cent for the delay in depositing the tax. Within a period of 30 days from the end of the month, the sum deducted under section 194IB should be credited to the central government.
One would have to pay a late fee of Rs 200 per day if one fails to file Form 26QC within 30 days from the end of the month in which the tax payment is made.
There are a few important details to know about TDS on house rent, according to the income tax brochure. After the TDS gets deducted, and Form 26QC gets filed, the tenant needs to provide Form 16C to the landlord. This needs to happen within 30 days of the TDS deduction. Also, tenants do not need a tax deduction accountant number (TAN) to file Form 26QC or issue Form 16C.