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TAX MANAGEMENT April 2018

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From June 1, 2017, Individuals and HUFs who don’t have to get their books of accounts audited and paying rent of more than Rs 50,000 have to deduct TDS at a specified rate. TDS on payment of rent by Individual or HUF has to be deducted at the rate of 5%

Time of deduction

TDS is to be deducted only once in a financial year. It can be either deducted at the time of credit of the rent to the account of payee (landlord) for the last month of the financial year OR the last month of the tenancy if the property is vacated during the year. It can also be deducted at the time of payment, whichever is earlier.

In case of Non-Government Assessee

• If tax deducted in the  month of March – 30th April

• Tax deducted for any other month – 7th Day of the next month

In case of Government Assessee

• In case the tax has to be deposited without challan – Same Day

• In case the tax has to be deposited with challan – 7th Day of the next month

Illustration: Ajay, who is a salaried employee is paying a rent of Rs 60,000 per month. He deducted the TDS @5% for the whole year in the month of March. The amount of TDS comes out to be Rs 36,000 (5%*7,20,000). Now this TDS should be deposited along with Form 26QC before 30th April, i.e. within 30 days from the end of the month in which TDS is deducted. Also, he should furnish the Form 16C to the landlord before 15th May, i.e. within 15 days from the due date of furnishing challan cum statement in Form 26QC

Submit Challan 26QC for Payment of TDS

TDS deducted should be paid within 30 days from the end of the month in which the tax is deducted. It shall be accompanied by a challan (cum) statement in Form 26QC. The TDS so deducted can be paid to the government electronically through Reserve Bank of India, State Bank of India, or any authorized bank

Steps to furnish 26QC: 1) Login to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp 2) Click on 26QC; fill in the following details 3) Tax applicable: It will be auto populated on the basis of the PAN status of the landlord (Corporate/Individual) 4) Financial year: It will be auto populated when you fill the date of payment credit 5) Status of the Landlord – Choose resident. If you have an NRI landlord section 194IB is not applicable to you  6) PAN of the Tenant and Landlord – Fill as per actual information 7) There are options for filling multiple PAN in case the property is co-owned and co-leased 8) Category of PAN will be auto populated from the tax database 9) Complete current address of landlord and tenant with pincode  10) Email id and mobile number of landlord and tenant 11) Complete address of the rented property with pin code 12) Provision to enter Tax amount (i.e. Basic Tax, Interest and Fee) is given in the Bank's website 13) Period of Tenancy will be the period (i.e. months) for which tenant is paying the rent. 14) Total value of Rent Payable is equal to the no. of month for which rent is payable * value of rent per month. 15) Amount Paid/Credited is the actual amount of the rent payable to the Landlord / Lessor / Payee for which he/she is filing Form 26QC 16) If Date of deduction is greater than Date of Payment/Credit, the same may result in Demand Notice for late deduction. 17) If Date of deduction is less than Date of Payment/Credit, the same may result in notice 18) If Date of furnishing Form 26QC is beyond prescribed due date, the same may attract late filing fee u/s 234E  19) Etax payment immediately will direct the taxpayer to the Net Banking /Debit Card login page 20) In case the taxpayer wishes to opt for etax payment on subsequent date, ACK No. will get generated and the same has to be retained by taxpayer and presented to any of the authorized Bank for further payment

Furnish Form 16C as Certificate for TDS Deduction to Payee

Form 16C is a new TDS certificate introduced by the government of India. It reflects the amount of TDS deducted on rent @ 5 % by the individual/HUF (u/s 194IB).  It is just like Form 16 or Form 16Aissued in the case of salary and other payments respectively. The person deducting the TDS on the rent is required to furnish Form 16C to the payee within 15 days from the due date of furnishing challan cum statement in Form 26QC. It is downloadable from the traces website

Steps of registering a traces id

1) Login to https://contents.tdscpc.gov.in/

2) Register as a new user>>Tax payer

3) Fill in name, pan and date of birth

4) Keep 26AS of any relavant year handy

5) Fill in details in option 1) TDS collected as per your 26AS

6) Submit this page

7) After entering valid details and captcha code, you will reach at step 2

8) In step 2, you have to enter communication address, mobile number and email address

9) Here, you have to choose password for your account. Password should have at least 1 capital letter, numbers, it should be 8 to 15 characters long. It may be RAFIK786, Rafik111, Rafik$000. I advise to choose password which you can remember easily

10) Now, you are in final stage of registration. Activation link will be sent to your email id and mobile number

11) You have to activate your account within 48 hours. Else your account will be deactivated. For it, click on link sent on site and enter activation code 1 in ‘code sent through email’ and activation code 2 in ‘code sent through SMS’.If you do not receive code or link, enter details in step 1 again and click on resend the codes

Steps to download Form 16C

1) Login to https://contents.tdscpc.gov.in/

2) Using your User name (PAN) and password as set above

3) On the left menu click on Form 16C

4) Fill in form type (26QC), assessment year, acknowledgement no: (obtained at the time payment of TDS, PAN of the landlord

5) It takes 3-7 days within 26QC upload for form 16C to be available for download

6) Furnish the same to the landlord

(Shubham is a Chartered Accountant and MBA (Finance). She is on the forum of “Economic Times” experts on Taxation.   She specialises in Individual Taxation and Taxation of Freelancers & Small businesses. She can be reached on info@taxfile.in for answering your tax related questions.)

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