When is TDS deducted on rent?

Howdy! I have been renting my 4 BHK apartment for residential purposes for 5 years now. Thus, I have a decent knowledge regarding the rent TDS deduction. I would like to express that knowledge by helping you out through this forum. So, follow along to know all the details.

When does TDS get Deducted on Rent?

Here are the circumstances under which TDS is deducted from rent. You also find out when the TDS is deducted through the explanation below.

Tax Deducted at Source or TDS will be deducted from your rent if your monthly house rent payment is either 50,000 rupees or more. 

The TDS is deducted on these particular occasions:

1. At the end of a financial year.

2. The date on which the property is vacated.

3. The date on which the rent agreement is terminated by the landlord.

4. Before paying the monthly rent.

What is the TDS Rate?

The TDS rate is 5% on house rent as per Section 194IB of the Income Tax Act, 1961. 

On this note, I would like to rest my answer. That’s all I had to say regarding the house rent TDS deduction. I hope this helps you.

Tax deducted at source is a type of income tax that is deducted by the person making the payment on making certain payments. It is levied on various types of income, such as the rent that the property owner receives from their tenant, professional fees, commission, salary, interest, and more. Now, that you know what is TDS, let’s read about who deducts TDS on rent and when to deduct TDS on Rent:

The current provisions apply to every taxpayer, such as a company, firm, trust or association of persons, and more.

In case the HUF or individual pays the rent, the provisions will be applicable if they are engaged in a profession or business and the accounts were needed to be audited during the previous year, due to the turnover being more than the specified limit.

If you pay the rent, then you need to deduct the tax when you credit the rent in its accounts book, even if the payment is made later. Similarly, you are required to deduct the tax when you pay the rent in advance. To credit the TDS payment to the government’s account, you are required to get the TAN (tax deduction account number) and deposit the tax via the specified challan.

I hope now you know what is TDS and when TDS is deducted on rent.