Under the Income Tax Act of 1961, Section 194-IB, individuals or Hindu Undivided Families (HUF) paying a monthly rent of ₹50,000 or more are required to deduct Tax Deducted at Source (TDS). The responsibility for this deduction falls on the tenant, who must remit the net rental payment to the landlord after deducting TDS.

Obligation to Deduct TDS

The tenant is mandated to deduct TDS at 5% of the total rent if the monthly rental payment exceeds the stipulated threshold. This deduction is applicable to rent payments made to a landlord who is not registered as a taxpayer under the Income Tax Act.

Consequences of Non-Compliance

Failure to adhere to TDS regulations under Section 194-IB can result in a penalty of up to ₹1 lakh. It is crucial for tenants to understand these regulations to avoid any financial liabilities related to non-compliance.

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