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Section 194-I of the Income Tax Act,
1961 was inserted vide Finance Act, 1994 for the imposition of tax on rent paid
or payable by an assessee. This section deals with “TDS on Rent.” The
government has introduced the provisions of this section in order to cover
income by way of rent, and the same has been included in the scope of Taxation.
This provision makes rental income taxable in India.
In India, many individuals purchase property for the purpose of investment. Such property is purchased with the intention to sell in the future with appreciated value or offer for rental to earn additional income in the form of rent. It is, therefore, apparent that the rental income forms a major source of income in India. It is for this reason that the Finance Ministry felt the need for the introduction of Section 194I in order to include rental income in the scope of taxation.
In the budget of 2019, the Finance
Minister has introduced an amendment in the provisions of the applicability of
TDS on Rental Income. Earlier, TDS on the rent was deducted by only
professionals or business houses. However, with the new amendment, salaried
employees are also now required to deduct TDS on rental income. Section 194-I,
along with its amendments, is discussed comprehensively henceforth.
Table of Contents
194-I of the Income Tax Act, 1961 governs the provisions for deduction of TDS
on Rent paid. This section also defines the treatment of TDS on Rent. This
section applies to the taxpayers whose primary source of income is earned by
way of renting or subletting their property.
in the form of rent received from the property is treated as an additional
income in the hands of the salaried employee or businessmen and is subjected to
TDS. Tax is deducted in the form of TDS from rental income in case the amount
paid/received in any financial year is INR
180000 or more.
Following payments are applicable
for the deduction of TDS on rental income:
Also Read: TDS Exemption Certificate.
Section 194-I does not apply to the following cases:
The tax is deducted at source at the earliest of the following:
The due date for deposit of TDS varies depending upon the case to case:
Following are the rates of deduction of tax at source:
In case of joint
ownership of the property; TDS on rent is required to be paid by such owner
whose share exceeds INR 180000 in any Financial Year.
Following is the time limit for the
issuance of TDS certificate in case of deduction of TDS on rent:
In the case of
In the case of
A TDS certificate
is issued in Form 16A every quarter as per Income Tax Act.
Key points for understanding Section 194-I
Following are the key points for
better understanding about section 194-I
Recommended Article: Section 201 of the Income Tax Act,1961 – Interest on Late Payment of TDS.
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