Online TDS/TCS return filling and related compliance – (Analysis of Section 194IB)
Introduction : In era where technology as substantially replaced the usage of man-power; our portal provides service where on the basis of raw data our experts will ensure all the TDS and TCS compliance including filling of returns. In this article we will analyze section 194IB of Income Tax Act, 1961 along with relevant illustration.
Which are the persons that are required to deduct TDS under section 194IB?
According to section 194IB of the Income Tax Act, 1961; assessee is required to deduct TDS in case of payment of rentals i.e., it prescribes that if assessee is Individuals or HUF; and whose gross receipt or turnover is not exceeding Rs. 1,00,00,000/- in previous financial year (Rs. 50,00,000/- for professionals) and who is paying monthly rent of more than Rs. 50,000/-.
Which are the items for which if rentals are paid than it will be covered under above section?
As per section 194IB if amount is paid as rent or lease or sub-lease or any other similar arrangements, for asset being Building including factory building, Land, Land appurtenant to a structure including factory building, Machinery, Plant, Furniture, Equipment, Fittings than in such case TDS will be deducted at the rate of 5% of such amount.
Which form is to be furnished as TDS return if deduction is under 194IB?
If person has deducted TDS under section 194IB, then such person will be liable to furnish Form 26QC. Such form is to be furnished by deductor and after successful filling such deductor will be required to furnish form 16C to the person to whom such rent is paid which will describe the amount paid and TDS deducted by the tenant; such certificate will be auto generated; only thing assessee will be required to do is, to request such form after 4-5 days of successful filling of form 26QC. This certificate is to be provided by tenant within 15 days from due-date of furnishing 26QC.
What is the time when TDS is required to be deducted under section 194IB?
Person will be required to deduct the TDS, on earlier of this event
- Month in which premises is vacated or
- Month in which agreement is terminated or End of financial year.
What will be procedure after deduction of TDS?
After deduction of TDS person will be required to file 26QC within 30 days from date of deduction, this is challan-cum-statement whereby assessee will be able to pay the tax as well as will be able to file the statement.
What is the threshold limit and rate of deduction under section 194IB?
As per section 194IB TDS is required to be deducted only if amount of consideration paid exceeding Rs. 50,000/- per month; It shall be noted that this limit is threshold limit i.e., if the rent is exceeding Rs. 50,000/- per month than in that case person will be required to deduct TDS on entire amount and not only on the amount which is exceeding Rs. 50,000/-.
What if the recipient of rent is not having Permanent Account Number?
It shall be noted that in case if recipient of rent does not have a valid permanent account number than in that case TDS is to be deducted at the rate of 20%. Further is shall be noted that when deduction at the rate of 20% is applicable than TDS deducted shall not exceed the rent payable for the last month of the previous year or the last month of the tenancy. Further, person who is required to deduct TDS under section 194IB will not be required to obtain TAN.
*TDS will not be applicable on Deposit
*While calculating limit of above section aggregate total is to be seen, (i.e., if rent paid for plant and machinery is Rs. 50,000/- for furniture Rs. 1,80,000/- and for equipment’s it is Rs. 40,000/- than in that case total rent is exceeding Rs. 2,40,000/- and therefore person will be covered under the provision.