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News18
29-07-2025
- Business
- News18
One TDS Mistake Cost Tenant Rs 1 Lakh Fine Despite Paying Rs 55k Regularly In Rent
Last Updated: A tenant received a Rs 1 lakh tax penalty for not complying with TDS provisions on his Rs 55k monthly rent. TDS On Rent: A tenant received the tax penalty of Rs 1 lakh by the income tax department despite paying a regular Rs 55k rent per month because he forgot to comply with the tax deducted at source (TDS), according to a report of ET. The tenant neither deducted TDS nor submitted the TDS challan cum return statement. Sujit Bangar, the founder of told ET that a tenant named Abhishek forgot to deduct TDS while paying Rs 55,000 per month in rent. 'As per section 271H of Income Tax Act, 1961, if a person fails to comply with TDS provisions and doesn't file a statement of TDS, there can be a penalty of minimum Rs 10,000 which can be extended to Rs 1 lakh," he added. Not all tenant have to deduct TDS. According to ection 194-IB of the Income Tax Act, 1961, those who are paying a rent over Rs 50000 per month are required to deduct 2 per cent as TDS and file a TDS challan to make the payment. Here's What Tenants Need To Do: Deduct 2% TDS and file Form 26QC online. Tenants will get Form 16C once they file Form 26QC. Tenants must give the Form 16C to the landlord. Select Form: Choose Form 26QC and click 'Proceed." Enter Tenant Details: Input tenant's PAN, name, address, and contact details. Verify with OTP. Add Landlord Details: Enter landlord's PAN, name, and address. Fill Property/Rent Details: Provide property address, rent agreement details, total rent, and tenancy period. Specify TDS Details: Enter TDS (2% rate), deduction date, and amount. Choose Payment Mode: Select online (net banking/debit card) or offline (bank payment). Review & Submit: Verify details, enter captcha, and submit. Pay online or save for offline. Complete Payment: Pay TDS online (get CIN) or offline at a bank. Download Form 16C: Log in to download Form 16C within 15 days, and share with landlord. Key Things You Should Know: TDS Rate: 2% (or 20% without landlord PAN). Due Date: File within 30 days of financial year-end, property vacation, or agreement termination. Penalties: Rs 200/day for late filing; Rs 100/day for late Form 16C; Rs 10,000-Rs 1,00,000 for non-filing. Use tenant/landlord PAN; no TAN needed. Check Form 26AS for accuracy. view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Economic Times
29-07-2025
- Business
- Economic Times
Paying Rs 55,000 rent on time could not save salaried taxpayer from Rs 1 lakh penalty for missing TDS, know why
ET Online (Representative image) This salaried individual was asked to pay a tax penalty of Rs 1 lakh because he was paying Rs 55,000 as monthly house rent and did not follow TDS compliance Recently , Abhishek, a salaried person who was living in a rented house, was asked to pay a tax penalty of Rs 1 lakh by the income tax department. Even though this penalty was discretionary, it was applied in his case because he was paying a rent of Rs 55,000 per month, but didn't comply with the tax deducted at source (TDS) rules. He neither deducted TDS nor submitted the TDS challan cum return statement. Sujit Bangar, the founder of handled this case and shared his insights with ET Wealth Online: 'Abhishek, a salaried person, was asked to pay a penalty of Rs 1,00,000 by income tax. His mistake? He paid Rs 55,000/month in rent but didn't deduct TDS. As per section 271H of Income Tax Act, 1961, if a person fails to comply with TDS provisions and doesn't file a statement of TDS, there can be a penalty of minimum Rs 10,000 which can be extended to Rs 1 lakh. In this case , Abhishek paid rent of Rs 55,000 per month but didn't deduct TDS and also didn't file the TDS statement (challan).' Also read: Taxpayer wins Rs 69-lakh unexplained investment income tax case in ITAT Mumbai on these technical grounds When is a tenant required to deduct TDS on house rent? As per Section 194-IB of the Income Tax Act, 1961, if you are an individual or HUF paying over Rs 50,000 in monthly rent to an Indian resident,you need to deduct 2% as TDS and file a TDS challan to make the payment. Just so you know, the TDS deduction rate for these rental payments was 5% before October 1, what tenants need to do: Deduct 2% TDS and file Form 26QC online. Tenants will get Form 16C once they file Form 26QC. Tenants must give the Form 16C to the landlord. O. P. Yadav, Tax Evangelist at & Former Principal Commissioner (Income-Tax) explains: 'In the case of rent paid to a non-resident landlord, TDS is to be deducted under Section 195 at the rate of 30% plus 4% cess, irrespective of the rent amount, at the time of payment or credit,whichever is earlier. For resident landlords, the deducted TDS is to be deposited using the Form 26QC (challan-cum-statement). In contrast, for non-resident landlords, the TDS must be deposited using Challan Form 281 and reported through a quarterly TDS statement in Form 27Q.' When will a tenant deduct TDS on house rent? The TDS on house rent must be deducted either at the end of a particular financial year, before you make the monthly rent payment, on the date on which the property is vacated, or when the rent agreement is terminated with the landlord, whichever comes first. Example 1: If a tenant has a rent agreement with a landlord for 11 months, say from September 2023 to July 2024, then the tenant can either deduct TDS on a monthly basis and deposit the same every month or deduct once from the March's rental payment. The TDS will be deducted for the rent paid i.e. from September to March 2023. Example 2: If the tenant is vacating the property in August 2023, then he will be required to deduct TDS before paying rent. Here rent will be deducted from April to August 2023 for 5 months. Tenants can be jailed for non-compliance of house rent TDS provisions? Yadav who is the former principal commissioner of Income Tax says that regular salaried individuals don't need to worry about imprisonment for non-compliance with house rent TDS explains: 'Prosecution under Section 276B, applies when TDS is deducted but not deposited within the prescribed time. The Section provides for rigorous imprisonment ranging from 3 months to 7 years, along with a fine. However, as per CBDT guidelines dated 09/09/2019, prosecution is generally considered only where the TDS default is up to Rs 25 lakh and the delay in payment is 60 days or more, unless the defaulter is a habitual offender. Importantly, such offences are compoundable under the CBDT's compounding guidelines.' Also read: Income tax offences: To avoid jail term when can you use income tax compounding provisions; CBDT issues new FAQ What are the four transactions where even a salaried individual has to deduct TDS? Bangar shares a table to show when a salaried individual is required to deduct TDS: Transaction Type Threshold TDS rate Section House rent Rent is more than Rs 50,000 per month 2% 194IB Real estate house purchase More than Rs 50 lakh 1% 194IA Contractor/Professional payments Annual payment more than Rs 50 lakh 2% 194M P2P Crypto payments Annual payments more than Rs 50,000 1% 194S Source: How much penalty can be levied if a tenant failed to follow TDS provisions for house rent? Experts that ET Wealth Online talked to mentioned there are two types of penal interest a tenant might face if they failed to deduct TDS on house rent. The first kind is when the tenant has deducted the TDS but did not deposit it with the government, that is 1.5% per month. The second type is the tenant neither deducted the TDS nor deposited it -- which incurs 1% penalty per month. Situation 1: Tenant did not deduct TDS on house rent despite the house rent being above Rs 50,000 per month (1% Interest) Chartered Accountant Mohit Gupta, partner, PNAM & Co. LLP explains: 'This TDS deduction from the house rent is to be made once in the financial year, at the time of credit or payment of the last month's rent. However, the Penalty under Section 271H may be waived if TDS is deposited and Form 26QC is filed voluntarily before the tax notice is issued.' Component Explanation FY 2022–23 FY 2023–24 Total TDS Liability @5% Rs 7.2L x 5% Rs 36,000 Rs 36,000 Rs 72,000 Interest u/s 201(1A) 1% p.m. from due date of deduction to actual deduction 24 months 12 months — Computation Interest = Rs 36,000 × 1% × 24 = Rs 8,640 Rs 36,000 × 1% × 12 = Rs 4,320 Rs 8,640 Rs 4,320 Rs 12,960 Late filing fee u/s 234E Rs 200/day from due date of filing Form 26QC till actual filing 730 days × Rs 200 = Rs 1,46,000 365 days × Rs 200 = Rs 73,000 Rs 2,19,000 Penalty u/s 271H(Discretionary) Rs 10,000 to Rs 1,00,000 if Form 26QC not filed Up to Rs 1L Up to Rs 1L Up to Rs 2L Prosecution (unlikely) Applicable only if willful default, not in routine salaried cases Not likely Not likely — Source: PNAM & Co. LLP Situation 2: Tenant has deducted TDS for FY 2022–23 and FY 2023–24 but missed depositing the TDS with the government within the due date but paid in April 2025. (1.5% interest) Yadav, explains: Particulars FY 2022–23 FY 2023–24 Yearly rent Rs 7,20,000 Rs 7,20,000 TDS Rate @5% @5% TDS Liability Rs 36,000 Rs 36,000 Date of rent paid for last month of FY 25/03/2023 25/03/2024 Date of deposit of TDS 30/04/2025 30/04/2025 Delay in deposit 25 months 13 Months Interest u/s 201(1A) @1.5% per month Rs 13,500 Rs 7020 Late payment fee u/s 234 E @ Rs 200/- per day - restricted to TDS Rs 36,000 Rs 36,000 Penalty u/s 271H Minimum Rs 10,000Maximum Rs 1,00,000 Minimum Rs 10,000Maximum Rs 1,00,000 Source: What happens if a tenant is sharing an accommodation with another person whose rent is Rs 60,000 per month? Gupta explains: If two tenants share an accommodation with a total rent of Rs 60,000 per month, they can legally avoid deducting TDS under Section 194-IB, provided certain conditions are met. The Rs 50,000 monthly threshold for TDS under this section is applied per tenant, not per property. Therefore, if each tenant pays Rs 30,000 directly to the landlord from their own bank account, and their respective obligations are clearly documented—either through separate rental agreements or a joint agreement specifying the rent split—then no TDS is required from either tenant. However, if one tenant pays the full Rs 60,000 and the other reimburses their share later, the tenant making the full payment becomes liable to deduct TDS on the entire amount. Similarly, if the rental agreement is solely in one tenant's name or there's no clear documentation of individual rent shares, the tax department may treat the full rent as paid by one person, triggering TDS liability.
Time of India
29-07-2025
- Business
- Time of India
Paying Rs 55,000 rent on time could not save salaried taxpayer from Rs 1 lakh penalty for missing TDS, know why
When is a tenant required to deduct TDS on house rent? Academy Empower your mind, elevate your skills Deduct 2% TDS and file Form 26QC online. Tenants will get Form 16C once they file Form 26QC. Tenants must give the Form 16C to the landlord. 'In the case of rent paid to a non-resident landlord, TDS is to be deducted under Section 195 at the rate of 30% plus 4% cess, irrespective of the rent amount, at the time of payment or credit,whichever is earlier. For resident landlords, the deducted TDS is to be deposited using the Form 26QC (challan-cum-statement). In contrast, for non-resident landlords, the TDS must be deposited using Challan Form 281 and reported through a quarterly TDS statement in Form 27Q.' When will a tenant deduct TDS on house rent? Tenants can be jailed for non-compliance of house rent TDS provisions? What are the four transactions where even a salaried individual has to deduct TDS? Transaction Type Threshold TDS rate Section House rent Rent is more than Rs 50,000 per month 2% 194IB Real estate house purchase More than Rs 50 lakh 1% 194IA Contractor/Professional payments Annual payment more than Rs 50 lakh 2% 194M P2P Crypto payments Annual payments more than Rs 50,000 1% 194S How much penalty can be levied if a tenant failed to follow TDS provisions for house rent? Component Explanation FY 2022–23 FY 2023–24 Total TDS Liability @5% Rs 7.2L x 5% Rs 36,000 Rs 36,000 Rs 72,000 Interest u/s 201(1A) 1% p.m. from due date of deduction to actual deduction 24 months 12 months — Computation Interest = Rs 36,000 × 1% × 24 = Rs 8,640 Rs 36,000 × 1% × 12 = Rs 4,320 Rs 8,640 Rs 4,320 Rs 12,960 Late filing fee u/s 234E Rs 200/day from due date of filing Form 26QC till actual filing 730 days × Rs 200 = Rs 1,46,000 365 days × Rs 200 = Rs 73,000 Rs 2,19,000 Penalty u/s 271H(Discretionary) Rs 10,000 to Rs 1,00,000 if Form 26QC not filed Up to Rs 1L Up to Rs 1L Up to Rs 2L Prosecution (unlikely) Applicable only if willful default, not in routine salaried cases Not likely Not likely — Particulars FY 2022–23 FY 2023–24 Yearly rent Rs 7,20,000 Rs 7,20,000 TDS Rate @5% @5% TDS Liability Rs 36,000 Rs 36,000 Date of rent paid for last month of FY 25/03/2023 25/03/2024 Date of deposit of TDS 30/04/2025 30/04/2025 Delay in deposit 25 months 13 Months Interest u/s 201(1A) @1.5% per month Rs 13,500 Rs 7020 Late payment fee u/s 234 E @ Rs 200/- per day - restricted to TDS Rs 36,000 Rs 36,000 Penalty u/s 271H Minimum Rs 10,000 Maximum Rs 1,00,000 Minimum Rs 10,000 Maximum Rs 1,00,000 What happens if a tenant is sharing an accommodation with another person whose rent is Rs 60,000 per month? If two tenants share an accommodation with a total rent of Rs 60,000 per month, they can legally avoid deducting TDS under Section 194-IB, provided certain conditions are met. The Rs 50,000 monthly threshold for TDS under this section is applied per tenant, not per property. Therefore, if each tenant pays Rs 30,000 directly to the landlord from their own bank account, and their respective obligations are clearly documented—either through separate rental agreements or a joint agreement specifying the rent split—then no TDS is required from either tenant. However, if one tenant pays the full Rs 60,000 and the other reimburses their share later, the tenant making the full payment becomes liable to deduct TDS on the entire amount. Similarly, if the rental agreement is solely in one tenant's name or there's no clear documentation of individual rent shares, the tax department may treat the full rent as paid by one person, triggering TDS liability. Recently , Abhishek, a salaried person who was living in a rented house , was asked to pay a tax penalty of Rs 1 lakh by the income tax department. Even though this penalty was discretionary, it was applied in his case because he was paying a rent of Rs 55,000 per month, but didn't comply with the tax deducted at source (TDS) rules. He neither deducted TDS nor submitted the TDS challan cum return Bangar, the founder of handled this case and shared his insights with ET Wealth Online: 'Abhishek, a salaried person, was asked to pay a penalty of Rs 1,00,000 by income tax. His mistake? He paid Rs 55,000/month in rent but didn't deduct TDS. As per section 271H of Income Tax Act, 1961, if a person fails to comply with TDS provisions and doesn't file a statement of TDS, there can be a penalty of minimum Rs 10,000 which can be extended to Rs 1 lakh. In this case , Abhishek paid rent of Rs 55,000 per month but didn't deduct TDS and also didn't file the TDS statement (challan).'As per Section 194-IB of the Income Tax Act, 1961, if you are an individual or HUF paying over Rs 50,000 in monthly rent to an Indian resident,you need to deduct 2% as TDS and file a TDS challan to make the payment. Just so you know, the TDS deduction rate for these rental payments was 5% before October 1, what tenants need to do:O. P. Yadav, Tax Evangelist at & Former Principal Commissioner (Income-Tax) explains:The TDS on house rent must be deducted either at the end of a particular financial year, before you make the monthly rent payment, on the date on which the property is vacated, or when the rent agreement is terminated with the landlord, whichever comes a tenant has a rent agreement with a landlord for 11 months, say from September 2023 to July 2024, then the tenant can either deduct TDS on a monthly basis and deposit the same every month or deduct once from the March's rental payment. The TDS will be deducted for the rent paid i.e. from September to March the tenant is vacating the property in August 2023, then he will be required to deduct TDS before paying rent. Here rent will be deducted from April to August 2023 for 5 who is the former principal commissioner of Income Tax says that regular salaried individuals don't need to worry about imprisonment for non-compliance with house rent TDS explains: 'Prosecution under Section 276B, applies when TDS is deducted but not deposited within the prescribed time. The Section provides for rigorous imprisonment ranging from 3 months to 7 years, along with a fine. However, as per CBDT guidelines dated 09/09/2019, prosecution is generally considered only where the TDS default is up to Rs 25 lakh and the delay in payment is 60 days or more, unless the defaulter is a habitual offender. Importantly, such offences are compoundable under the CBDT's compounding guidelines.'Bangar shares a table to show when a salaried individual is required to deduct TDS:Source: that ET Wealth Online talked to mentioned there are two types of penal interest a tenant might face if they failed to deduct TDS on house rent. The first kind is when the tenant has deducted the TDS but did not deposit it with the government, that is 1.5% per month. The second type is the tenant neither deducted the TDS nor deposited it -- which incurs 1% penalty per did not deduct TDS on house rent despite the house rent being above Rs 50,000 per month (1% Interest)Chartered Accountant Mohit Gupta, partner, PNAM & Co. LLP explains: 'This TDS deduction from the house rent is to be made once in the financial year, at the time of credit or payment of the last month's rent. However, the Penalty under Section 271H may be waived if TDS is deposited and Form 26QC is filed voluntarily before the tax notice is issued.'Source: PNAM & Co. LLPTenant has deducted TDS for FY 2022–23 and FY 2023–24 but missed depositing the TDS with the government within the due date but paid in April 2025. (1.5% interest)Yadav, explains:Source: explains:
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Business Standard
09-07-2025
- Business
- Business Standard
Over ₹50k on rent? Here's the TDS rule that could cost you big if ignored
Paying rent above Rs 50,000 a month? As a tenant, you may be legally required to deduct tax at source (TDS) and deposit it with the government. Missing this crucial step could land you in trouble with penalties of up to Rs 1 lakh, tax experts warn. What the law says Under Section 194-IB of the Income Tax Act, individuals or Hindu Undivided Families (HUFs) not subject to tax audit must deduct TDS at 2 per cent if the monthly rent exceeds Rs 50,000. 'This provision, introduced in 2017, is still widely misunderstood, especially among salaried tenants in metro cities paying high rents,' said Niyati Shah, chartered accountant and vertical head -- Personal Tax at 1 Finance. 'If your monthly rent exceeds Rs 50,000, you must deduct TDS at 5 per cent and deposit it once in a financial year, either in March or when vacating the property, whichever is earlier,' explained Kinjal Bhuta, chartered accountant, advocate and secretary, Bombay Chartered Accountants' Society. 'There's no need to obtain a Tax Deduction Account Number (TAN); quoting your PAN and the landlord's PAN is sufficient.' 'The deducted tax must be deposited via Form 26QC within 30 days and a Form 16C TDS certificate issued to the landlord within 15 days,' Shah added. For those running businesses or professions with turnover above RS 1 crore (business) or Rs 50 lakh (profession), Section 194-I(b) applies. 'Such taxpayers must deduct TDS at 10 per cent if annual rent crosses Rs 2.4 lakh and require a TAN,' noted Suresh Surana, chartered accountant. What happens if you miss it? Failing to comply can be expensive. 'Overlooking TDS obligations can lead to a financial and compliance headache,' Shah warned. Experts states consequences include: -Interest of 1 per cent per month for not deducting TDS and 1.5 per cent per month for delayed deposit. -Late filing fee of Rs 200 per day until Form 26QC (the TDS return for rent) is submitted. -Penalty up to Rs 1 lakh under Section 271H for not filing Form 26QC or issuing Form 16C on time. In extreme cases, prosecution with jail terms ranging from 3 months to 7 years may apply for wilful defaults, Surana said. Missed the deadline? Here's what to do Voluntary compliance is key. 'If you've missed TDS, calculate and deposit it immediately with applicable interest through Form 26QC. Then issue Form 16C to your landlord,' advised Shah. She added that tenants can request a waiver of penalties by citing genuine reasons, especially for first-time lapses. Surana agreed, stressing the importance of acting swiftly. 'Prompt correction before receiving a tax notice is viewed favourably by authorities.' Common mistakes to avoid Many tenants wrongly assume TDS applies only when rent is paid to companies or that personal rent is exempt. 'TDS applies irrespective of whether the landlord is an individual, HUF, or company, provided the Rs 50,000 threshold is crossed,' Surana clarified. Experts suggested few precautions for tenants: -Collect the landlord's PAN when signing the lease. -Maintain proof of TDS payment and Form 16C issuance. -Cross-verify entries in the landlord's Form 26AS to avoid disputes. Why it matters With the Income Tax Department tracking high-value transactions digitally, tenants ignoring TDS obligations risk notices, interest and penalties. 'A small deduction today avoids a big problem tomorrow,' Shah summarised
India Today
07-07-2025
- Business
- India Today
House rent above Rs 50,000? Here's the TDS rule you need to know
If you're paying more than Rs 50,000 a month in rent, there's a tax compliance rule that's easy to miss, but costly to ignore. Under Section 194-IB of the Income Tax Act, even salaried individuals are required to deduct tax at source (TDS) before paying rent and deposit it with the rule is often misunderstood as applicable only to businesses or those under tax audit. But it also covers individuals, including salaried tenants. Anyone paying rent above the Rs 50,000 threshold in a financial year must deduct 2% TDS and file the necessary deduction must be made once during the year—either in March or the final month of the tenancy, whichever comes earlier. The tenant is then required to file Form 26QC and provide Form 16C to the landlord. Non-compliance can trigger serious consequences. According to a tax compliance platform, one salaried individual named Abhishek paid Rs 55,000 per month in rent but failed to deduct TDS. As a result, he was issued a penalty of Rs 1,00,000 by the income tax department.'Abhishek, a salaried person, was asked to pay a penalty of Rs 1,00,000 by income tax. His mistake? He paid Rs 55,000/month in rent but didn't deduct TDS. Even salaried people need to deduct TDS at times,' stated in a LinkedIn case, also highlighted by the platform, involved Rohan, a salaried employee who had been paying Rs 60,000 in rent since April 2022. He failed to deduct and deposit TDS for two consecutive financial years. When he finally complied in April 2025, he ended up paying Rs 37,000 in late fees and interest—more than the TDS amount obligations are often overlooked in personal financial planning. Yet failure to comply can lead to a late fee of Rs 200 per day under Section 234E, capped at the amount of TDS due. Interest accrues at 1% per month for failure to deduct and 1.5% for failure to deposit, under Section 201(1A). Penalties between Rs 10,000 and Rs 1,00,000 can be levied under Section 271H, and prosecution is also possible under Section 276B, carrying a jail term of three months to seven 194-IB is one of several personal-payment-related TDS provisions. Under Section 194-IA, buyers must deduct 1% TDS on property purchases exceeding Rs 50 lakh. Section 194M requires individuals to deduct 2% TDS on personal payments exceeding Rs 50 lakh made to contractors, professionals or agents. Meanwhile, Section 194S applies to peer-to-peer crypto transactions conducted outside exchanges, mandating a 1% authorities have been tightening scrutiny on high-value personal payments. As examples show, routine transactions like paying rent can easily invite penalties if compliance is tenants living in high-rent homes, the line between a routine payment and a tax lapse can be thinner than it seems, and ignoring it can invite penalties that quickly snowball.- Ends
