• Notification Date: 09.02.2022
• Notification No: N/A

Deduction of 30% TDS from Rental Income

The tenants are required to deduct 31.2% of TDS on the rent that they pay to an NRI. As per the I-T Act, the tax is deposited with the government. There is no minimum threshold on that rent. In case, the total income of the NRI landlord is below the taxable limit, then he or she can apply for a reduced rate of TDS deduction. They have to apply for a certificate under Section 197 for the purpose. The certificate would instruct the tenant to deduct a lower rate of TDS as per the AO order.

A penalty will be charged if the tenant fails to deduct the amount of TDS from the rent paid to the NRI landlord. The amount of penalty will be the same as that of the TDS as per Section 271C of the I-T Act. The tenant must acquire a TAN through the NSDL website to deduct the tax as per the Income-tax Act requirements. After obtaining the TAN, the tenant can deduct the TDS amount and pay the rest of the rent to the landlord.

The TDS deducted from the rent of a particular calendar month is required to be paid within the seventh of the upcoming month. Legal steps will be taken if the TDS is not deposited within the due time. The landlord is not entitled to deduct the TDS. The tenant is responsible for the compliance.