TDS must be taken out of a tenant’s rent payment if it exceeds Rs 50,000 to a landlord who resides in India. The TDS on house rent is slightly different in cases where a flat is shared by many tenants. Additionally, this is based on the type of rental agreement.
Although your real rent expense may be low if you rent a shared flat or home, you may still be required to withhold tax from the rent payment at the source. Rent payments must automatically have TDS deducted at a set rate from them if the tenant’s monthly rent payment to his Indian-resident landlord exceeds Rs 50,000. As a result, someone paying a monthly rent of Rs 20,000 for a shared flat would believe he is not required to deduct TDS from the rent because the sum is far lower than Rs 50,000. However, if several renters share an apartment, this might not always be the case.
Three criteria determine whether you must deduct TDS.
According to tax experts, three variables decide whether TDS must be withheld from rent payments in accordance with Income Tax law or not.
(i) the landlord’s residency status;
(ii) the monthly rent payment amount; and
(iii) the rent agreement’s legal language.
According to Amarpal Chadha, Partner and India Mobility Leader, EY India, “It is important to note that, if the rent is being paid to a non-resident landlord, the TDS would be required to be deducted, irrespective of the amount of rent.”