The government has revised the TDS rules on house rent, as announced by Finance Minister Nirmala Sitharaman in the Union Budget.
This change is especially beneficial for senior citizens and those earning rental income.
The exemption limit for TDS on house rent has been increased from Rs 2.4 lakh to Rs 6 lakh per annum.
According to the Finance Minister’s statement on February 1, this update will reduce the number of transactions subject to TDS, making it easier for small taxpayers.
Here’s how both tenants and landlords stand to benefit from this announcement.
How the Rule Change Will Affect You
If you have rented out a house and the annual rent is over Rs 2.4 lakh, your tenant used to deduct TDS before paying you the rent.
However, with the new rule, the tenant will now pay the rent without deducting TDS. This change increases the amount of rent you receive.
The government has raised the TDS exemption limit on house rent from Rs 2.4 lakh to Rs 6 lakh. This rule change will benefit both tenants and property owners.
Now TDS on rent of more than 6 lakh rupees
Under the new rule, if a tenant is paying rent for a house with an annual rent above Rs 6 lakh, they will need to deduct TDS before paying the landlord.
This is because tenants are responsible for deducting TDS on rent payments. Prior to FY19, the exemption limit for TDS on rent was Rs 1.8 lakh.
It’s important to note that the tenant will deduct TDS at a rate of 10% on the rent amount. However, if the landlord does not have a PAN, the TDS rate will increase to 20%.
Benefits for Both Tenants and Landlords
Tax experts believe that the recent change in TDS rules on rent in the Union Budget will benefit many people.
With the rapid rise in house rents over the past few years, tenants had to deduct TDS if their monthly rent exceeded Rs 20,000.
This led to more compliance requirements. However, under the new rule, there is no need to deduct TDS on rent up to Rs 50,000 per month.
This change will offer significant relief to renters, especially in large cities like Delhi and Mumbai.
