Section 194-IB of ITA, 1961 : Section 194-Ib: Payment Of Rent By Certain Individuals Or Hindu Undivided Family

Explanation using Example

Imagine that Mr. Sharma is a retired individual who owns a second house in Delhi. He rents out this house to Ms. Neha, who works in a multinational company. The monthly rent agreed upon is ₹60,000. According to Section 194-IB of the Income-tax Act, Mr. Sharma, being an individual landlord, is responsible for deducting tax at source (TDS) since the rent exceeds ₹50,000 per month.

Mr. Sharma must deduct 5% of the monthly rent as TDS before handing over the rent to Ms. Neha. So, he will deduct ₹3,000 (which is 5% of ₹60,000) and pay Ms. Neha ₹57,000....

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