New Delhi, Mar 27: The Income Tax Department has issued notices to taxpayers who pay ₹50,000 or more in monthly rent but have not deducted Tax Deducted at Source (TDS) while remitting the amount to their landlords.
Many taxpayers have received notices for the assessment years 2023-24 and 2024-25, stating that they claimed House Rent Allowance (HRA) but did not deduct TDS. The notice states, “If you want to file an updated return by reducing your claim, this is the right time to do it,” said Abhishek Murali, President of the All India Tax Payers’ Association.
These notices have been sent to several taxpayers across the country, he said.
Murali explained that tenants paying rent of ₹50,000 or more must deduct 2% TDS (effective from October 2024, earlier 5%) and remit it to the Income Tax Department.
“Where you are a tenant of a particular house property and you are paying a rent of ₹50,000 or more, the Income Tax Act mandates that as a tenant you need to deduct TDS of 2% on the rent you are paying to the landlord. So the onus to deduct the TDS is on the tenant. The tenant has to deduct the TDS and remit it to the Income Tax Department and pay the balance to the landlord,” Murali said.
“If the tenant has failed to do so, the person is considered as an assessee in default. Then you are subject to a levy of certain interest, fines, and penalties by the Income Tax Department, which may vary from 1-1.5% per month depending on the individual cases and time of the default,” he added.
An exemption applies if the landlord has filed an income tax return, declared the rental income, and paid the necessary taxes. “If you are able to furnish the information to the assessing officer, you will not be considered as assessee in default and need not pay any interest or penalty,” Murali said.
“However, some landlords may not be comfortable sharing certain confidential/private documents. Therefore, it is advisable that all assessees properly deduct and remit the TDS in a timely manner to comply with the law and to avoid being an assessee in default,” he added.
