All about TDS deducted on rent payments Form16C Certificate

What is Form 16C?

Form 16C is a certificate under the Income Tax Act that provides details of the TDS deducted on rent payments. It is specifically associated with Section 194IB, which mandates that individuals or HUFs paying rent of INR 50,000 or more per month deduct TDS at 5%. Unlike other TDS deductions that require TAN registration, PAN can be used to deduct TDS and issue Form 16C. This form is issued by the tenant (deductor) to the landlord (deductee). Timely compliance with the TDS deduction and issuance of Form 16C ensures smooth processing and avoids penalties.

• TAN Requirement: TAN is not required under Section 194IB to deduct TDS and file Form 26QC. however, No PAN Details: If the landlord does not provide their PAN, TDS will be deducted at a higher rate of 20%
• TDS is deducted at the rate of 5% if the rent is ₹50,000 or more per month. For FY 2020-21, a reduced rate of 3.75% was applicable from May 14, 2020, until March 31, 2021.
• The TDS deducted should be paid within 30 days from the end of the month in which the TDS was deducted using Form 26QC.

Key Features of Form 16C

• • Issued by: Individuals or HUFs paying rent > ₹50,000/month.

  • Issued to: Landlords (deductee).

  • TDS Rate: 5% of the rent amount.

  • PAN-Based Deduction: No TAN required.

  • Associated Form: Form 26QC must be filed before issuing Form 16C

Difference Between Form 16, 16A, 16B, and 16C

Form	Issued For	Mandatory	Details Provided	Legal Backing
Form 16	Salary by employer	Yes	Salary and TDS	Section 192
Form 16A	Other income (e.g., interest) by deductor	Yes	TDS only	Section 194
Form 16B	Property sale by buyer	Yes	TDS on property sale	Section 194IA
Form 16C	Rent by individual or HUF	Yes	TDS on rent	Section 194IB

• Section 194I applies to all individuals and HUFs making rent payments, but the threshold is INR 2,40,000 per year, and it includes various types of assets (e.g., land, building, machinery).
• Section 194IB, introduced for non-tax audit individuals/HUFs, focuses on monthly rent payments of INR 50,000 or more for land and building only, with a lower TDS rate of 5%.

TDS Payment to the Government

1. Timeframe for TDS Deposit: The deducted TDS must be deposited within 30 days from the last date of the month in which TDS was deducted.
2. Form 26QC: A challan-cum-statement for TDS deduction on rent (Section 194IB) must also be completed and submitted when depositing the TDS electronically.
3. Payment Options: TDS can be deposited through the RBI, SBI, or other authorized banks.
4. Form 16C will include: Deductor and deductee details (e.g., name, PAN). Details of the TDS deducted. After deducting and depositing the TDS, the tenant (deductor) must issue Form 16C to the landlord (payee) within 15 days from the due date of Form 26QC submission. This certificate reflects the rent payment and TDS details
5. Form 16 is for TDS on salary, issued by employers. Form 16C is for TDS on rent, issued by tenants to landlords.

Due Date for Issuing Form 16C

• Form 16C must be issued to the landlord within 15 days after filing Form 26QC.
• Late issuance of Form 16C attracts a penalty of ₹100 per day of delay under Section 234E.

Steps to Download Form 16C- How to Download Form 16C: 

1. Visit the Official Portal: Go to the TRACES website (https://www.tdscpc.gov.in/).
2. Log in: Use your User ID, password, and verification code to log in.
3. Navigate to Downloads: On the landing page, select the “Downloads” tab. and Choose “Form 16C” from the options.
4. Select Assessment Year: Provide details like:
   • Acknowledgment number (from Form 26QC)
   • Tenant’s PAN
   • Landlord’s PAN

5. Request Form 16C:Register on the TRACES website with PAN and details of TDS deducted or Form 26QC.  If already registered, log in to download Form 16C. Form 16C can be downloaded once the necessary details are provided
   • Confirm details and submit the request.
   • Once processed, download Form 16C.
6. After introduction of Section 194-IB & Form 16C, the compliance process for individuals & HUFs making high-value rent payments.  PAN-based deduction, online filing via Form 26QC, and issuance of Form 16C within a defined timeframe reflect the Govt aim to broaden the TDS base without overburdening the taxpayer.
7. Non-Compliance Penalty: Failure to deduct or deposit TDS within the specified time can result in penalties, including interest and a fine of ₹200 per day for late filing of Form 26QC.

Form 15CA/CB required In the case of payment of rent to a NRI landlord

In the case of payment of rent to a Non-Resident Indian (NRI) landlord, here is a structured response based on your case facts:

Query: Case Summary:

• Tenant (Person A) pays ₹70,000 per month = ₹8,40,000 per year.
• The landlord is a non-resident.
• Payment is being made to the landlord’s NRO (Non-Resident Ordinary) account.

Whether 15CA/CB compliance is required for the payment of rent made by Person A ?

Legal Framework:

• Section 195 of the Income Tax Act: Mandates deduction of TDS on any sum (other than salary) paid to a non-resident, if such sum is chargeable to tax in India.
• Income tax Section 195(6) read with Rule 37BB : requires filing of Form 15CA and, in applicable cases, Form 15CB for foreign remittances. Applies even if payment is made to an NRO account, as long as the payee is non-resident and the income is chargeable to tax.

15CA/CB Compliance & Taxability and Filing Requirements:

Particulars	Details
Is rent taxable in India?	Yes, under “Income from House Property”
Annual rent exceeds ₹5 lakhs?	Yes (₹8.4 lakhs)
Is the landlord non-resident?	Yes
Account credited (NRO)?	Yes – still considered a remittance to NRI
TDS applicable u/s 195?	Yes – generally at 30% + applicable surcharge & cess, unless DTAA or lower deduction certificate applies
Form 15CB required?	Yes, because the payment exceeds ₹5 lakhs and is chargeable to tax in India

 From Compliance:

• Form 15CA – Part C: Required, since the payment is taxable and exceeds ₹5 lakh.
• Form 15CB: Required from a Chartered Accountant, certifying nature of payment, TDS applicability, DTAA (if any), etc.

Alternate scenario: If a lower/nil deduction certificate is obtained from the Assessing Officer (u/s 197), then:

• Form 15CA – Part B should be filed (instead of Part C).
• Form 15CB is not required.

Solution:

The rent is chargeable to tax in the hands of non-resident owner. The amount of payment exceeds INR 5,00,000 during the financial year. Part C of Form 15CA should be filled along with Form 15CB or Part B of Form 15CA should be filed if lower TDS certificate has been obtained from the AO. Important Notes:

• TDS u/s 195 must be deducted before making payment.
• TDS must be deposited using Challan 281 and Form 27Q filed quarterly.
• Form 16A should be issued to the NRI landlord