Section 194IB Rent payment that is made by an individual or HUF not covered under payment 194I

Section 194IB of the Income-tax Act concerns tax deducted at source for rent payments. Section 194IC was added to include 'Joint development agreement' of real estate in TDS. This agreement is between the asset owner and developer.

Section 194IB Explanation

Section 194IB requires individuals/HUF not subject to audit u/s 44AB to withhold taxes on rent over Rs 50,000 per month paid to a resident.

Section 194IB's Definition of Rent

Rent, as per this section, refers to payment for assets under a lease or similar agreement. These assets include: 

• Land
• Building, including factory buildings
• Machinery
• Furniture
• Equipment
• Plant
• Fittings
• The payee's ownership of the assets is not a requirement.

TDS Deduction Point

TDS should be deducted by individuals or HUFs at the following times: 

• When the rent is credited (for the final month of the previous year or the final month of tenancy if the property is vacated earlier), or
• When the payment is made (through any mode).

TDS Rate Under Section 194IB

The tax rate is 5% if the rent exceeds Rs 50,000 and the landlord’s PAN is available. 

If PAN is not provided, a TDS of 20% applies.