Wondering what is TDS on rent? The TDS on rent section is Section 194-I of the IT Act. The rent received from the renting out or subletting of property is subject to TDS (tax deduction at source).

Tax (TDS) deduction rules to keep in mind

It is important that you know few regulations regarding the TDS on rent. These regulations govern the deduction of tax (TDS) on rental income that is earned by self-employed professionals, entrepreneurs etc.

  • Tax (TDS) is required to be deducted by the person paying the rent from rent payable and pay it to the government.
  • TDS applies in case the aggregate of the rent amount that is paid/credited or expected to be paid/credited crosses `2,40,000 per financial year as per the Union Budget 2019-20 (this cap was `1,80,000 earlier).
  • Individuals or Hindu Undivided Family (HUF) who are not subject to Tax Audits are liable to deduct tax (TDS) at 5% of the rent in case they are paying an amount which exceeds `50,000 every month to a resident Indian. This amendment has come into effect from the 1st June, 2017.

What is Rent?

While learning about TDS on rent, it is also imperative to know more about what the term ‘rent’ actually signifies. Rent equates to any payment, which is made under any sub-lease/lease/tenancy/arrangement/agreement for using the following:

  • Building (inclusive of factory buildings)
  • Land
  • Land appurtenant to any building (inclusive of factory buildings)
  • A plant like an industrial or manufacturing facility
  • Equipment like tools, computer systems, networks, other infrastructure required for running a business
  • Machinery
  • Fittings
  • Furniture

Tax (TDS) Deduction Rates

Tax (TDS) has to be deducted at the time of crediting/paying the income by way of rent to the payee account through a cheque/draft/cash or other payment methods. The rates of TDS can be summed up as follows:

  • Rent for plant/ equipment/ machinery- 2% TDS on the rent amount paid
  • Rent for land/building/furniture/fittings- 10% TDS on the rent amount paid
  • Individual/HUF not liable to tax audit - 5% TDS on the rent paid in cases where more than `50,000 is paid per month as rent.

Key timelines for TDS deductions

Tax (TDS) has to be deducted at the time of payment or credit of rent to the owner or landlord and payment to the government is required to be made within 7 days from the end of the month in which the deduction is made. In case the amount has been paid/credited in March, the deadline is 30th of April.

How to save on income tax with life insurance?

You can save on income tax with insurance investments under Sections 80C, 80D & 10(10D). The following are the savings that you can garner in this regard:

  • Section 80C offers tax benefits up to `46,800* on life insurance premiums paid annually. However, this is not just with regard to life insurance but also for PPF (Public Provident Fund), ELSS (Equity-Linked Savings Scheme), Senior Citizens Saving Scheme, Sukanya Samriddhi Scheme, NSC (National Savings Scheme), tax-saver FDs (Fixed Deposits) and the payment of home loan principal amount.
  • Section 80D offers tax benefit up to `7,800* on health insurance premium paid for yourself, your spouse and children and tax benefit upto `7,800 on health insurance paid for parents below the age of 60. In case parents are above the age of 60, you can claim deductions up to `50,000 from taxable income for their health insurance plans annually. This works out to a maximum of `50,000 for your parents (if they are above the age of 60) and `25,000 for yourself and your family members. Within the maximum limit, you can get deductions up to `5,000 on preventive health check-ups too.
  • Benefits received under insurance policies are exempt subject to conditions under Section 10(10D)

Understanding TDS on rent is vital if you are planning to rent or lease a home or other property from a landlord/property owner in the near future.


^Tax benefit of `46,800 u/s 80C & Rs7,800 u/s 80D is calculated at highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium u/s 80C of `1,50,000 and health premium u/s 80D of `25,000. Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.

1Tax benefit of `54,600 ( `46,800 u/s 80C & `7,800 u/s 80D) is calculated at highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium u/s 80C of `1,50,000 and health premium u/s 80D of `25,000. Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.

2Tax benefit of `7,800 is calculated at highest tax slab rate of 31.2% (including Cess excluding surcharge) on health premium u/s 80D of `25,000. Tax benefits under the policy are subject to conditions under Section 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.

3Tax benefit of `46,800 is calculated at highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium u/s 80C of `1,50,000. Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.

W/II/3659/2018-19

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