Tax on monthly rental of residential flat

Dear Sir,

If your tenant is paying rent as an individual, he is not liable to deduct tax. Might be he is deducting TDS u/s 194 IB which is also wrong. Please ask copy of challan from him and also under which section he is deducting tax.

Thanks

Hi

Please communicate with your tenant as to what tax is he talking about. With the above amount, no rate of tax deduction seem to work out.

Also, if he is deducting TDS, it will be deposited under your PAN and you can claim such amount while filing your income tax returns.

Hi,

If you are receiving rent from a Resident Indian and you yourself is an NRI, then rental income received by you is liable for Tax Deduction at Source (TDS) u/s 195 of the Income Tax Act, 1961. Currently, the rate of such TDS is 30% for any payments of rental nature made to an NRI.

As such, in your case, total TDS which should be deducted shall be 30% of Rs. 75,600 per month which works out Rs. 22,680 plus any arrears which might not have been deducted in the past. Thus, you should receive net amount of Rs. 52,920 in your account after TDS.

You need to regularly file your Income Tax Return in India in order to claim/ regularize such TDS deducted. In case your income is below the taxable rate of 30%, you will receive refund of the balance amount after proper assessment of your ITR by the Assessing Officer.

However, what you have said here is that you are receiving an amount of Rs. 60,909 net after deduction of tax. This works out to approx. 19.43% of your rental income, which is not the rate as per the current laws.

You should seek clarity from your tenant on this and ask for proper TDS Certificates from him/ her.

If you have a PAN allotted in your name, you can also check/ verify the same from the website of Income Tax Department in Form 26AS. This will ensure that proper TDS deducted by tenant is being deposited in the account of the tax authorities.

I hope it is clear to you now.

Regards,

Hi Sidharth,

Yes, your tenant is liable to deduct TDS u/s 195.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Hi Sidharth G,

1. w.e.f. 1st June 2017, a new section 194 IB (TDS on Rent) inserted under Income Tax Act.

2. The provision of this section applies to a Individual who are paying rent more than 50,000 per month.

3. Rate of TDS is @5% on rent payable (rate is 20% if PAN of landlord is not available).

4. However, you can take the TDS certificate from tenant in FORM 16C.

Let me know for any other query.

Dear Sir,

As you are NRI in India during the relevant previous year, tenant is liable to deduct TDS @30.9% on the total rent payment made to you during the relevant previous year. Ask copy of Form 15CA and 15CB to reconcile the figures. No need to worry, while filing ITR in India, you can take the benefit of TDS deducted by the tenant on your behalf.

Section 194 IB is not applicable in your case as you are NRI.

Thanks

Since he is paying to NRI,he is liable to deduct tax under sec 195 @ 30.9%. however you can take credit of same while filling your income tax return.