TDS on Rent: Under Section 194I of the Income Tax Act, if you pay more than Rs 2.4 lakh annually as rent to someone, you have to deduct TDS on it.
TDS on Rent: When it comes to house rent, many times the landlord or the tenant has to face Tax Deduction at Source (TDS). Especially when the TDS deducted on rent is more than your actual tax liability. In such a situation, it is possible to get back the extra TDS deducted, but for this you have to follow the right procedure. Here we will try to understand in simple language how you can get a refund of the extra TDS deducted on your rent.
What is TDS on rent?
First, it is important to understand what TDS on rent is. Under Section 194I of the Income Tax Act, if you pay more than Rs 2.4 lakh annually as rent to someone, you have to deduct TDS on it. The person or company (such as a tenant or a business) paying rent to the landlord deducts it and deposits it in the government account. The rate of TDS on rent is usually 10% if the rent is being paid to an individual or a Hindu Undivided Family (HUF). But if the rent is paid to a company or firm, the rate can be 2% (especially for rented spaces for machinery etc.).
The problem arises when the TDS deducted is more than your actual tax liability. For instance, if your total income is less than the tax exemption limit (Rs 2.5 lakh per annum, in the old tax regime), you need not pay any tax. But if the landlord has deducted TDS, you can get that money back as a refund.
What to do to get a refund?
According to tax expert Balwant Jain, to get the refund of additional TDS, you have to file Income Tax Return (ITR). But before that, check some important things. First of all, you have to see whether the landlord has deducted TDS and deposited it with the government. For this, you can check Form 26AS. This form is your tax credit statement, which contains the details of all the TDS deposited in your name. You can download it from the Income Tax Department’s website or through your net banking account.
Jain says, “If the TDS details are not visible in Form 26AS, then talk to the landlord. It is possible that they have deducted TDS but have not deposited it with the government. In such a situation, the landlord has to give Form 16A, which contains complete details of TDS. If the landlord has not deposited the TDS, then you will have to first ask him for it, because refund of TDS cannot be claimed without depositing it.”
Step 1: Gather the required documents
Before you begin the refund process, gather some important documents. These include:
Form 26AS: As we mentioned, this is your tax credit statement. It will contain information about TDS deducted on rent.
Form 16A: This will be given to you by the landlord, which will contain information about the amount of TDS and the date of deposit.
Rent Agreement: This should contain the rent amount, payment dates and PAN number of the landlord.
Other income documents: If you are employed, Form 16, bank statement, or any other income certificate is required. If you do business, profit and loss statement is required.
Bank account details: The refund will come directly into your bank account, so keep the correct bank details ready.
Without these documents, there may be problems in the refund process, so prepare them in advance.
Step 2: File Income Tax Return (ITR)
The most important step to get TDS refund is to file income tax return. For this, you have to go to the e-filing website of the Income Tax Department (www.incometax.gov.in). If you are filing return for the first time, then first create your account. For this you will need PAN number, Aadhaar number, and a valid mobile number.
While filing returns, you have to choose the right ITR form. Generally, if you are a salaried person or have no income other than rent, then ITR-1 (Sahaj) form will suffice. But if you have a business or other types of income, then you may have to choose ITR-2, ITR-3 or ITR-4.
While filing ITR, you need to fill in the details of your total income, exemptions (such as investments under section 80C) and TDS. Match the Form 26AS to ensure that the TDS deducted on rent is correctly recorded. If your total income is less than the taxable limit, you can claim a full TDS refund. If your income is taxable but the TDS deducted is more than your tax liability, the excess amount will be refunded.
Step 3: Refund claim process
After filing ITR, the Income Tax Department processes your return. If everything is correct, your refund will be credited to your bank account in a few weeks or months. But if there is any mistake in the return, such as wrong TDS amount or wrong details of income, the department can send you a notice. In such a case, you will have to respond by visiting the online portal.
Sometimes, if the refund amount is high, the department may ask you for additional documents. In such a case, documents like rent agreement, Form 16A, and bank statement may have to be submitted. Therefore, always keep soft and hard copies of these documents with you.
Step 4: Check the refund status
It may take time for the refund amount to come to your account. You can check the status of your refund by visiting the e-filing portal. For this, click on ‘Refund/ Demand Status’ in the ‘My Account’ section. If the refund has been processed, you will get information about the refund date and amount. If the refund is delayed, you can contact the Income Tax Office.
Step 5: What to do if landlord deducted wrong TDS?
Sometimes landlords deduct more TDS by mistake or deduct TDS unnecessarily. If your income is less than the tax exemption limit, you can give Form 15G (or Form 15H for HUF/ senior citizens) to the landlord. These forms state that your income is not taxable, and the landlord should not deduct TDS. But if TDS has been deducted, you must file ITR to get a refund.
Step 6: Seek professional help
If you feel that the process of TDS and ITR is complicated, then take the help of a chartered accountant or tax consultant. They can file your return correctly and speed up the refund process. Yes, discuss their fees in advance, so that there are no surprises later.
Keep some things in mind
- Always file ITR on time. The last date for filing income tax returns is usually July 31.
- Make sure to get the PAN number from your landlord, because TDS cannot be deposited without PAN.
- If you are a tenant and the landlord is not deducting TDS, then ensure that the rent is less than Rs 2.4 lakh per annum, so that there is no need to deduct TDS.
- In this way, with the right information and procedure, you can easily get a refund of the excess TDS deducted on your rent. All you need is a little patience and the right documents.
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