Rent payments in India are subject to taxation, and both tenants and landlords have specific tax obligations. Those receiving rent payments must report the income on their income tax return and pay taxes based on their income tax slab. If paying rent, tax deductions may be available under Section 80GG of the Income Tax Act, subject to certain conditions.
If the rent paid exceeds a specific threshold, the tenant must deduct tax at source (TDS) at a 10% rate under Section 194-IB of the Income Tax Act. If the aggregate rent paid or expected to be paid throughout the year goes beyond Rs. 2.4 lakhs for audit cases and 50,000 per month for non audit cases, the payer of rent is required to deduct TDS under Section 194I of the Income Tax Act. The limit of Rs. 2.4 lakhs (audit) / 50,000 per month (non audit) is applicable for each payee, not for each property.
Failure to deduct TDS on rent may result in a penalty interest of 1% per month until the TDS is deducted.
It's crucial to understand these tax rules and obligations when paying or receiving rent payments in India. It's recommended to seek advice from a tax professional or chartered accountant for specific guidance based on individual circumstances.
So,If you pay rent only to receive funds to your bank account from credit cards or meet specific milestones, it's crucial to be aware of the tax regulations concerning paying and receiving rent payments. It's highly recommended to discontinue such practices as they may result in trouble for you.
If the rent paid exceeds a specific threshold, the tenant must deduct tax at source (TDS) at a 10% rate under Section 194-IB of the Income Tax Act. If the aggregate rent paid or expected to be paid throughout the year goes beyond Rs. 2.4 lakhs for audit cases and 50,000 per month for non audit cases, the payer of rent is required to deduct TDS under Section 194I of the Income Tax Act. The limit of Rs. 2.4 lakhs (audit) / 50,000 per month (non audit) is applicable for each payee, not for each property.
Should you Deduct TDS on Rent?
- Currently, a person who is not an individual or a HUF is liable to deduct TDS on rent of more than Rs. 2.4 lakhs.
- In case you belong to the Individual or HUF category, you can deduct the TDS at 5% if the rent that you are giving exceeds Rs. 50,000 per month.
Failure to deduct TDS on rent may result in a penalty interest of 1% per month until the TDS is deducted.
It's crucial to understand these tax rules and obligations when paying or receiving rent payments in India. It's recommended to seek advice from a tax professional or chartered accountant for specific guidance based on individual circumstances.
So,If you pay rent only to receive funds to your bank account from credit cards or meet specific milestones, it's crucial to be aware of the tax regulations concerning paying and receiving rent payments. It's highly recommended to discontinue such practices as they may result in trouble for you.
