TDS New Rules: According to the Income Tax Act, people paying more than 50 thousand per month as house rent have to deduct TDS and deposit it with the government through Form-26QC. This TDS is deducted from the amount of rent payable annually.
Due to the new rules of Income Tax Deduction (TDS) on rent and technical glitches on the IT portal, there has been a state of confusion between landlords and tenants. Due to this, they are facing a lot of difficulty in filing income tax returns and getting refund for the financial year 2025. Additional necessary documents are also being sought from them.
Rules changed, information not received
According to the Income Tax Act, people paying more than 50 thousand per month as house rent have to deduct TDS and deposit it with the government through Form-26QC. This TDS is deducted from the amount of rent payable annually. In return, the landlord gets Form-16C (TDS Certificate).
The problem arose here
Earlier the rate of TDS on rent was five percent, which was reduced to 2 percent on October 1, 2024. But most of the tenants did not get information about it. As a result, a large number of tenants deducted tax as per the old rate and deposited it through Form-26QC.
Problems of landlords also increased
Due to the technical flaw of the trace system, landlords have also faced problems. When they are matching Form-26AS and AIS, they are seeing only 2 percent TDS deduction (credit), whereas the deduction is at the rate of five percent. Due to this, they are facing difficulty in filing income tax returns. For landlords, TDS credit ensures that they have already paid tax to the government.
Refund process
In view of this problem, the Income Tax Department is sending emails to the tenants. In these, they have been asked to claim refund online through Form 26B. In some cases, additional documents are also being sought.
How to fill the application
- Login to the TRACE website. Click on ‘Request for Refund’ under the ‘Statements/Forms’ tab.
- Then select the option ‘I have wrongly paid excess tax’. Add the relevant Challan 26QC and fill in the details.
- The refund amount that can be claimed in Form 26B will be automatically filled in. Add the bank account details in which you want the refund.
- E-verify the form using digital signature or Aadhaar-based OTP and submit it online.
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