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.

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

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.

• 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.