Decoding TDS and GST Tax Implications on Rent in India

14 Feb, 2024

In India, the realm of taxation is vast and often intricate, with numerous regulations governing various financial transactions. One such area that frequently raises questions and concerns is the taxation on rental income. Both Tax Deducted at Source (TDS) and Goods and Services Tax (GST) play crucial roles in the taxation of rental income, each with its own set of rules and implications.

Understanding TDS on Rent for Residential Properties

• TDS stands for Tax Deducted at Source, and it applies to rental income exceeding a certain threshold.
• For residential properties, the current threshold for TDS applicability is ₹2,40,000 per annum.
• If the annual rent exceeds this threshold, the tenant is required to deduct TDS at a rate of 10% before making the payment to the landlord.
• Both the landlord and the tenant must possess a PAN (Permanent Account Number) card.
• The tenant is obligated to provide the landlord's PAN details while deducting TDS.
• The tenant needs to fill Form 26QC online and submit it through the TRACES portal after deducting TDS.
• This form serves as a record of TDS deduction on rent.
• Upon successful submission and payment of TDS, the tenant receives a TDS certificate (Form 16C) as proof of tax deduction.
• Goods and Services Tax (GST) is not applicable to residential properties rented for residential purposes.

GST on Commercial Rentals

• Goods and Services Tax (GST) applies to renting of commercial properties, including building , land , machinery , equipments , plant , furniture & fittings , shops , offices , wearhouse  etc.
• Unlike residential properties, there is no threshold limit for the applicability of GST on commercial rentals.
• Businesses renting commercial properties can avail Input Tax Credit on the GST paid on rent.
• Landlords earning rental income from commercial properties are required to register under GST if their aggregate turnover exceeds the prescribed threshold limit.

More informations in details coming soon on the topic TDS and GST on Rent.  To be Continued

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Publisher: Sumathi Bhaskar | Bizprout Corporate Solutions Pvt Ltd