The section provides for deduction of TDS@5% on rent paid by an Individual or HUF to a resident individual exceeding Rs.50,000/- a month.
The section reads as follows:
194-IB. (1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.
(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.
Explanation.—For the purposes of this section, “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.]
The CBDT vide. G.S.R. 561(E) has prescribed the rules and form to be filled for deduction under this section.
It is prescribed that TDS under Section 194-IB of the Act shall be paid within a period of 30 days from the end of the month in which deduction is made and shall be accompanied by challan-cum-statement in Form No. 26QC. The tax shall be paid electronically within prescribed time. The person deducting TDS under Section 194-IB shall furnish certificate in Form No. 16C to the payee within 15 days from the due date of furnishing challan-cum-statement in Form No. 26QC. Further, Form No. 16C i.e. certificate for tax deducted at source and Form No. 26QC i.e. challan-cum-statement of deduction of tax under Section 194-IB of the Act have been prescribed.
Further, the notification has also prescribed rules and format for Form 26QC and Form 16C.
Find the link below for the notification: