Section - 194IB - Deduction of tax at source in the case of certain Individuals and Hindu undivided family -


Under the existing law, tax is to be deducted at source from payment of rent if the amount of rent exceeds Rs.1,80,000/- in a year. The provision is applicable also to individuals or Hindu undivided Families who are liable for Tax Audit under section 44AB. Individuals and HUFs who are not subjected to audit are exempt from the obligation to deduct tax at source.


This new section is sought to be inserted making individuals and HUFs not subject to audit under section 44AB liable to deduct tax at source out of income by way of rent if the amount of rent exceeds Rs.50000/- per month or part thereof. The tax is to be deducted at the rate of 5% of the amount of rent.


It is also provided that such deduction shall be only once in the financial year and will be made out of rent for the last month of the previous year or the last month of the tenancy if the premises is vacated during the year. Where the tax is to be deducted under section 206AA because of non furnishing of PAN by the deductee, it is provided that the amount of tax to be deducted shall not exceed the rent payable for the last month.


The deductor in such cases shall not be required to obtain TAN.


Amendment will be effective from 1st June 2017.