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TDS on the rent payment to landlord

Posted @ February 12, 2018, 10:55 pm under (Payroll Outsourcing & Taxation)

  • Deduction of Tax: If the monthly rent paid by tenant is more than Rs 50,000, he is required to deduct tax at the rate of 5% of the monthly rent against Permanent Account Number (PAN) of the landlord.

    In cases PAN is not provided by the landlord, tax is to be deducted at a higher rate of 20%, but it should not exceed the amount of rent payable for the last month of the preceding financial year or the last month of the tenancy.

    To keep it simple for individual tenants, tax has to be deducted only once a year in the month of March or at end of the tenancy, whichever is earlier. Further, the tenant (deductor) is not required to obtain Tax Deduction Account Number (TAN).


  • Deposit of Tax: Once a tenant deducts the TDS, the tax needs to be deposited within 30 days from the end of the month in which the deduction is made. It can be deposited electronically by filling the challan-cum-statement in Form No. 26QC containing information such as: name, PAN, address, mobile number and email address of the landlord, period of tenancy, total value of rent paid and value of rent paid last month, amount of TDS that has been deducted and date of deduction, details of tax deducted, interest and fee along with date and mode of payment and so on.

  • Certificate of Deduction: within 15 days of submitting Form 26QC, the certificate of deduction in Form No. 16C can be downloaded from e-tax web portal. This form should be delivered to the landlord without delay.

  • Penalties for non-compliance: Failure to deduct TDS, or deposit it within the specified time, can attract Penal interest at 1% per month of the withholding tax, whereas for non-payment it would be 1.5% per month.

    Fees for late filing of TDS returns can be Rs. 200 per day of delay and penalty ranges from Rs10,000 to Rs1 lakh.

    Besides penalty and interest, defaulters can also face imprisonment, which shall not be less than 3 months but may extend to 7 years and with fine.


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