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Paying TDS (Tax Deducted at Source) on rent is an essential compliance requirement for both individuals and businesses in India. If you are paying rent exceeding Rs. 50,000 per month, you must deduct TDS and deposit it with the government. Many taxpayers find this process complicated, but with the right guidance, it can be done smoothly. In this blog, we will provide a step-by-step guide on how to pay TDS on rent online with ease.
TDS on rent is a tax deducted at the time of rent payment by the tenant and deposited with the Income Tax Department. It ensures that tax liabilities are met on rental income. According to Section 194IB of the Income Tax Act, individuals and HUFs (who are not required to audit their accounts) must deduct TDS at 5% on rent exceeding Rs. 50,000 per month. Businesses and other entities must deduct 10% as per Section 194I.
Individuals & HUFs (paying rent above Rs. 50,000 per month)
Businesses & Corporates (deducting TDS at 10% if rent exceeds Rs. 2,40,000 annually)
NRIs Paying Rent in India (Different rules apply under Section 195)
Failing to pay TDS on rent on time can result in penalties and interest charges. To avoid any issues, ensure timely compliance by following the steps below.
Visit the official Income Tax e-Filing Portal.
Log in using your PAN or TAN credentials.
If you are a first-time user, register your PAN or TAN before proceeding.
Click on ‘e-Pay Tax’ under the ‘Quick Links’ section.
Select ‘Proceed’ and choose Challan No./ITNS 26QC (for individuals/HUFs) or Challan No./ITNS 281 (for businesses).
Fill in details like PAN, financial year, and assessment year.
Landlord's PAN & Details – Ensure the PAN of the landlord is correctly entered.
Rent Amount & TDS Calculation – Calculate the correct amount:
5% for individuals/HUFs (under Section 194IB)
10% for businesses (under Section 194I)
Payment Mode – Choose between net banking, debit card, or NEFT/RTGS.
Verify details and proceed to payment.
The system will redirect you to your selected bank’s net banking portal.
Complete the payment using the income tax app or your bank’s portal.
Once payment is made, download the challan receipt (Challan 26QC/281).
After payment, return to the Income Tax Portal and navigate to ‘Downloads’ > Form 16C.
Fill in the required details and generate Form 16C.
Provide Form 16C to the landlord, as it serves as proof of TDS deduction.
For Individuals & HUFs – 30 days from the end of the month in which rent is paid.
For Businesses & Other Entities – 7th of the following month.
For NRIs (Section 195) – As per prescribed tax rates.
Failing to pay TDS on rent can lead to severe penalties:
Interest @1% per month on non-deduction
Interest @1.5% per month on late deposit
Penalty under Section 271C (up to the amount of TDS not deducted)
Late filing penalty of Rs. 200 per day under Section 234E
To avoid such penalties, it is advisable to use an ITR filing expert or an income tax app like JJ Tax to automate tax payments.
Incorrect PAN of Landlord – Always verify the PAN before submission.
Wrong TDS Calculation – Ensure correct % is applied (5% or 10%).
Late Deduction & Payment – Stick to the due dates to avoid penalties.
Not Issuing Form 16C – This is a legal requirement for tenants.
Paying TDS on rent can be a hassle, especially for first-time taxpayers. JJ Tax simplifies this process with its expert guidance and easy-to-use income tax app. Here’s how JJ Tax can assist:
Automated TDS Calculation & Payment Assistance
Reminders for Due Dates to Avoid Penalties
Expert Guidance from ITR Filing Experts
Quick Form 16C Generation
Yes, you can pay TDS on rent through authorized bank branches using Challan 26QC, but online payment is faster and more efficient.
No, individuals paying rent under Section 194IB do not require a TAN; only PAN is needed. However, businesses must have a TAN for TDS payments.
You can file a correction request on the TRACES portal or consult an ITR filing expert for assistance.
You must issue Form 16C within 15 days of payment. Failure to do so can attract penalties.
Paying TDS on rent is a crucial tax obligation, and non-compliance can lead to penalties. With digital advancements, the process is now straightforward and can be completed in a few clicks. Using an income tax app like JJ Tax can help ensure smooth TDS payments, avoid penalties, and make reply to income tax notice hassle-free.
If you need assistance with tax compliance, JJ Tax is here to help! Download the app today and experience seamless tax filing and TDS management.
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