Form 26QC: TDS on Rent under Section 194-IB

The government introduced a new Section 194IB in the 2017 Budget to put the high rental income category under the purview of taxes. Rent payments of Rs 50,000 or more by individuals and HUFs are subject to this Section's 5% TDS deduction requirement. This section will take effect on June 1st, 2017. If a tax audit (under section 44AB) applies to an individual or HUF, they are the only ones who must deduct TDS at the rate of 10% until March 31, 2017. Therefore, regardless of the amount of rent paid, the individual or HUF not covered by the tax audit was not allowed to deduct TDS in this instance.

However, an individual or HUF is additionally obliged to deduct TDS at the rate of 5% if rent is paid more than Rs 50,000. Rent payments made by an individual or HUF under section 194IB are subject to a reduced TDS rate of 3.75% for payments made between May 14, 2020, and March 31, 2021, for the financial year 2020–2021.

What is Form 26QC?

Form 26QC is a quarterly statement of tax deductions made under section 200(3) of the Income Tax Act concerning the final quarter's salary. Employee salary information, including the amount of TDS withheld, must be reported in 24Q. If the deductor has withheld payments or withheld payments at a reduced rate, the reasons for doing so must also be noted in the Form. Two annexures are included. The information about the challan and the deductee breakdown of TDS is contained in Annexure I, and the information about the salary paid or credited for the applicable financial year and the net tax payable is contained in Annexure II.

Who needs to File Form 26QC?

Form 26QC must be filed by the property's renter, who is responsible for paying the resident landlord's rent. Tenant payments for rent are subject to a five percent TDS deduction.

When to File Form 26QC?

The deadline for paying TDS on rent is thirty days after the end of the month in which the deduction is made. On the other hand, the tenant has 30 days from the end of the fiscal year, the day the property is vacated, or the termination of the rent agreement to complete Form 26QC.

Form 26QC Online Payment

The steps to submit Form 26QC online are as follows:

Step 1: Clicking the link will take you to the TIN website. You would have to choose TDS on the rent of property under the services category in the portal's menu bar.

Step 2: After choosing TDS on the property rent, proceed to the bottom of the page and select the online form to provide TDS on the property.

Step 3: Select TDS on the rent of property under the e-payment of taxes, and then click continue.

Step 4: Fill out Form 26QC accurately. This form consists of four components that you must read through and complete.

Details for Filing Form 26QS

The following are the required details for filling out Form 26QS:

Tenant PAN and Name
Landlord PAN and Name
Address of Tenant and Landlord
Address of Rented property
Type of Asset (Building, land, or both)
Tenant’s and Landlord’s Mobile No and email ID of
Tenancy period (No of Months)
Total Rent payable
Rent paid in last month
Date of Payment and tax Deduction
Bank Payment Details

Penalty for Delay/Non-Filing of Form 26QS

For every month that the tax isn't deducted, you have to pay 1% interest. If the tax has been withheld but not deposited, the penalty is greater and lasts for one month at 1.5%.
The tenant would be subject to a penalty ranging from Rs. 10,000 to Rs. 1,00,000 if Form 26QC was not filed within a year of the due date.
There is a 200 rupee late fine for each day if Form 26QC is not filed on time. The penalty for failing to issue Form 16C on time is one hundred rupees per day.

Conclusion

An essential part of India's tax system is Form 26QC. It guarantees that rental income is fairly taxed. To stay out of trouble and meet deadlines, tenants need to be aware of their duties. The process is now easier to access and more effective thanks to online filing choices.

FAQ

Q1. What is the purpose of Form 26QC?

The transactions subject to TDS on rent under section 194-IB are reported in Form 26QC, a challan cum return statement that must be filed each month after the payment.

Q2. How much penalty will you have to pay for late filing of Form 26QC?

Penalties for late filing might include interest, late fees, and hefty fines. The amount of TDS involved and the length of the delay determines the precise penalty.

Q3. Can the landlord file Form 26QC instead of the tenant?

No, since the tenant is the one paying the rent, Form 26QC is their duty. The tenant is required to use this form to deduct and file TDS.

Q4. What is Form 16C?

Anybody who has deducted TDS from rent under section 194-IB is required to give a TDS certificate in Form 16C to the deductee or landlord. The landlord or deductee must receive Form 16C from the bank within 15 days of filing Form 26QC or sending the TDS payment to an approved bank.

Q5. How do I obtain Form 16C, and what is its importance?

A TDS certificate, Form 16C, is given to the landlord (deductee) by the tenant (deductor). It is necessary for the deductee's tax compliance and gives information on the TDS withheld from rent payments.

Q6. What if the tenant does not deduct TDS on rent?

The tenant may be subject to fines and interest if they neglect to deduct TDS. Furthermore, they still have to give the government the TDS amount.

Q7. Can I rectify Form 26QC after filing?

Yes, you can file a correction statement to fix any inaccuracies found in the form after it has been filed. To avoid further penalties, though, you must take quick action.

Q8. What is the TDS limit for rent?

Renters are required by Section 194-I of the Income-tax Act to deduct ten percent TDS from any building or land. If the annual rent paid exceeds Rs 2,40,000, TDS is charged.

Q9. Is Form 26QC monthly or yearly?

Every month after the payment date, Form 26QC, a challan cum return statement, must be completed to report the transactions subject to TDS on rent under Section 194-IB.