An individual pays rent of an amount exceeding Rs.50000/- on a monthly basis. As per section 194IB, he is required to deduct tax.
Query is,
1.whether tax is required to be deducted and deposited on a monthly basis (and also file 26QC) as the rent is paid every month?
2.Or required to be deducted and deposited at the end of the FY or last month of the agreement during the year whichever is earlier?
3.Or required to be deducted on monthly basis but deposit only after end of the FY/last month of the agreement during the year?
The provision in the section is very ambiguous.
As per my understanding, the tax is required to be deducted on credit or payment whichever is earlier basis and also to be deposited within 30 days along with 26QC.
Experts are requested to interpret the section.
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Payment of TDS by an individual and filing 26QC
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Quick Summary
194 IB: An Individual or HUF is paying rent of more than Rs. 50,000 per month – such person would also be required to deduct TDS @ 5% under Section 194IB.
Tenants must deduct and pay the tax to the government once per financial year i.e Tenant needs to deduct TDS on March month rent or on the last tenancy month. A challan-cum-statement, Form 26QC, should be used to make this payment. Further, the tenant must provide Form 16C, a TDS certificate, to the landlord as proof of the tax deposited. A tax deduction account number (TAN) is not necessary to make the transaction.
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