One TDS Mistake Cost Tenant Rs 1 Lakh Fine Despite Paying Rs 55k Regularly In Rent

A tenant received the tax penalty of Rs 1 lakh by the income tax department despite paying a regular Rs 55k rent per month because he forgot to comply with the tax deducted at source (TDS), according to a report of ET. The tenant neither deducted TDS nor submitted the TDS challan cum return statement.

An tax expert told ET that a tenant named Abhishek forgot to deduct TDS while paying Rs 55,000 per month in rent.

“As per section 271H of Income Tax Act, 1961, if a person fails to comply with TDS provisions and doesn’t file a statement of TDS, there can be a penalty of minimum Rs 10,000 which can be extended to Rs 1 lakh,” he added.

Not all tenant have to deduct TDS. According to section 194-IB of the Income Tax Act, 1961, those who are paying a rent over Rs 50000 per month are required to deduct 2 per cent as TDS and file a TDS challan to make the payment.

Here’s What Tenants Need To Do:

Deduct 2% TDS and file Form 26QC online.

Tenants will get Form 16C once they file Form 26QC.

Tenants must give the Form 16C to the landlord.

Step-by-Step Guide to File Form 26QC (TDS on Rent)

Visit TIN-NSDL: Go to www.tin-nsdl.com, select “Services” > “TDS on Rent of Property” > “Form 26QC.”

Select Form: Choose Form 26QC and click “Proceed.”

Enter Tenant Details: Input tenant’s PAN, name, address, and contact details. Verify with OTP.

Add Landlord Details: Enter landlord’s PAN, name, and address.

Fill Property/Rent Details: Provide property address, rent agreement details, total rent, and tenancy period.

Specify TDS Details: Enter TDS (2% rate), deduction date, and amount.

Choose Payment Mode: Select online (net banking/debit card) or offline (bank payment).

Review & Submit: Verify details, enter captcha, and submit. Pay online or save for offline.

Complete Payment: Pay TDS online (get CIN) or offline at a bank.

Download Form 16C: Log in to www.tdscpc.gov.in, download Form 16C within 15 days, and share with landlord.

Key Things You Should Know:

TDS Rate: 2% (or 20% without landlord PAN).

Due Date: File within 30 days of financial year-end, property vacation, or agreement termination.

Penalties: Rs 200/day for late filing; Rs 100/day for late Form 16C; Rs 10,000-Rs 1,00,000 for non-filing.

Use tenant/landlord PAN; no TAN needed.

Check Form 26AS for accuracy.

Source from: https://www.news18.com/business/tax/one-tds-mistake-cost-tenant-rs-1-lakh-fine-despite-paying-rs-55k-regularly-in-rent-ws-l-9470484.html