Is your Rent more than 50000 per month?

[Tax with Ria]

ALERT
IF RENT IS MORE THAN 50000 PER MONTH

Many high paying resident individuals are paying rent of more than ₹50000 per month.
Then you'll have to deduct TDS under section 194IB @ 5% and then pay remaining balance rental amount to your landlord. If PAN of landlord is not available then TDS @20% is applicable.

TDS needs to be deducted, earlier of:
Credit / Payment of rent for last month of the year or
last month of tenancy if property is left during the year.

Eg- You live in Bangalore on rental basis of ₹60000 per month, then TDS shall be ₹3000(60000*5%), and you need to pay ₹57000 to your landlord.

The TDS so deducted has to be submitted by you within 30 days from the end of the financial year in which TDS is deducted in form 26QC.
A Form 26QC is a challan cum statement. If you have deducted any tax u/s 194-IB, then you are required to deposit such tax through this form, due date for filing of 26QC shall be 30th April, 2024.

Form 16C is simply a TDS certificate similar to Form 16 & 16A. This certificate is issued to the landlord by the tenant when TDS u/s 194-IB is deducted. It acts as proof that TDS has been deposited to the government. It is important to note that a person who is deducting TDS needs to issue this form within 15 days from the date of filing of the challan (Form 26QC).

 

[17ysaurabh]

Hey @Ria
I have been paying Rs. 26k rent to my mom every month since last April 2023. I did this to save taxes as per HRA being provided by my company.
My mom is a housewife, So, this will mainly be her income source apart from some interest from banks and FDs.

What do you think about this? Any suggestions or things that I should know related to this?

 

[Tax with Ria]

Hey @Ria
I have been paying Rs. 26k rent to my mom every month since last April 2023. I did this to save taxes as per HRA being provided by my company.
My mom is a housewife, So, this will mainly be her income source apart from some interest from banks and FDs.

What do you think about this? Any suggestions or things that I should know related to this?

You must file income tax return of your mom by downloading 26AS.
And prepare a rent agreement from between you and your mom to avoid any future notices under 143(1) from income tax department.

Remember following points-

• Genuine rental agreement: A formal rental agreement is mandatory, outlining details like rent amount, duration, and payment mode.
• Proof of payment: Rent should be demonstrably paid through bank transfers or traceable channels. Cash transactions are frowned upon.
• Ownership verification: The property must be solely owned by your parent(s) – joint ownership with you nullifies the deduction.
• Market-driven rent: The rent amount should be at market rates for similar properties in the locality. Inflated figures raise red flags and invite scrutiny.

 

[17ysaurabh]

You must file income tax return of your mom by downloading 26AS.
And prepare a rent agreement from between you and your mom to avoid any future notices under 143(1) from income tax department.

Remember following points-

• Genuine rental agreement: A formal rental agreement is mandatory, outlining details like rent amount, duration, and payment mode.
• Proof of payment: Rent should be demonstrably paid through bank transfers or traceable channels. Cash transactions are frowned upon.
• Ownership verification: The property must be solely owned by your parent(s) – joint ownership with you nullifies the deduction.
• Market-driven rent: The rent amount should be at market rates for similar properties in the locality. Inflated figures raise red flags and invite scrutiny.

Thanks!
I have already created the rental agreement via the No Broker platform. Also, I have transferred the rent every month via UPI to my mom's account.
I'm just concerned about your last point. I live in Lucknow.
Do you think Rs. 26k rent would raise red flags?
Also, I was thinking of consulting a CA to file my income tax return this year as I also have some STCG.
Let me know if you know of any online platform that helps in this.

 

[Tax with Ria]

Hey @Ria
I have been paying Rs. 26k rent to my mom every month since last April 2023. I did this to save taxes as per HRA being provided by my company.
My mom is a housewife, So, this will mainly be her income source apart from some interest from banks and FDs.

What do you think about this? Any suggestions or things that I should know related to this?

Thanks!
I have already created the rental agreement via the No Broker platform. Also, I have transferred the rent every month via UPI to my mom's account.
I'm just concerned about your last point. I live in Lucknow.
Do you think Rs. 26k rent would raise red flags?
Also, I was thinking of consulting a CA to file my income tax return this year as I also have some STCG.
Let me know if you know of any online platform that helps in this.

Well i file ITR as a freelancer and i am a registered tax advisor and consultant. So, if you've any further doubts you can email me at my registered email id- sachanriya25@gmail.com