For taxpayers who have been paying a rent of around Rs 50,000 or more per month and have not deducted Tax Deducted At Source (TDS), while remitting the amount to their landlord, the tax department has issued notices to taxpayers, a tax expert told the media recently.
The Income Tax Department (ITD) has sent notices to many taxpayers regarding the assessment years 2023-2024 and 2024-2025, stating that you made a claim of House Rent Allowance (HRA) for specific years and did not deduct TDS on that. Abhishek Murali, president, All India Tax Payers’ Association, told the media that if you want to file an updated return by reducing your claim, this is the right time to do it.
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Murali told media: “Where you are a tenant of a particular house property and you are paying a rent of Rs 50,000 or more, the Income Tax Act mandates that as a tenant you need to deduct TDS of two per cent (effective from October 2024 earlier it was five per cent) on the rent you are paying to the landlord. So the onus to deduct the TDS is on the tenant. The tenant has to deduct the TDS and remit it to the Income Tax Department and pay the balance to the landlord.”
“If the tenant has failed to do so, the person is considered an assessee in default. Then you are subject to a levy of certain interest, fines, and penalties by the Income Tax Department, which may vary from one to 1.5 per cent per month depending on the individual cases and time of the default,” he added.
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Murali again said that there is one exemption to this. “If the landlord has filed is Income Tax return and shown the rental income and if has paid the taxes duly calculated on the same and if you are able to furnish the information to the assessing officer, you will not be considered as assessee in default and need not pay any interest or penalty,” he said.
He, however, added that some landlords might not be comfortable sharing certain confidential or private documents. “Therefore, it is advisable that all assesses properly deduct and remit the TDS in a timely manner to comply with the law and to avoid being an assessee in default,” he said.
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