TDS on rent Kansala Naresh & Associates1. Applicable On?

       1. Salaried class individual claiming HRA on personal house rent payment.
       2. Small business which are not liable for tax audit u/s 44ab

2. Applicable From?

         This provision is applicable from June 1, 2017

3. Applicable When?

        Paying rent more than ₹50,000 per month.

4. Rate of TDS ?

       5%  (Five per cent) of rent paid.

5. When to deduct TDS ?

  • At the end of financial year OR
  • At the end of agreement between landlord and tenant

TDS needs to be deducted only one time in a year

TAN is not required to deduct TDS under this section.

Landlord Must provide his PAN to tenant else TDS will be deducted as per the provisions of section 206AA, (i.e. maximum higher rate) and

Deduction without landlord PAN shall not exceed the amount of rent payable for that month.

Let’s understand it with Illustrations

Illustration I.

Suppose Mr X, a tenant pays Rs. 60,000 per month to Mr Y, a landlord. Whether TDS to be deducted?

Since rent paid per month is mor than ₹50,000. TDS should be deducted as follow:

Amount of rent (Annual) = 60000*12 = 7,20,000
Amount of TDS = 7,20,000*5% = 36,000

Rent payable to landlord during March = (60000-36000) = 24,000.

For the rest of the month whole 60,000 will be paid to landlord

Illustration II.

Suppose rent agreement between landlord and tenant made for the period April to July. Amount ₹60,000

Since amount exceeded ₹50,000 and tenancy agreement made for 4 months only  therefore TDS to be deducted @5% as follow

Amount of rent for 4 months = 60,000*4 = 2,40,000
Amount of TDS = 2,40,000*5% = 12,000

Amount payable to landlord at the end of tenancy agreement (i.e. in July) = (60,000-12,000) = 48,000

For the rest of the month whole 60,000 will be paid to landlord

s Untitled logo2 Kansala Naresh & AssociatesDisclaimer: Due care has been taken to draft this write-up and is intended to express the Authors understanding and to start an academic discussion on the subject discussed in above write-up. it should not be considered as professional advice. Readers are advised to refer to relevant provisions of law before applying any of the above-mentioned views. The author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the content of this write-up.

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