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Section 194IB of the Income Tax Act mandates that individual or HUF tenants (not liable to tax audit) must deduct TDS on rent exceeding ₹50,000 per month. Key change:
Due to the recent rate change, many tenants mistakenly continued to deduct 5% TDS even after the rate was lowered to 2%. As a result:
However, due to lack of awareness, many tenants continued deducting 5% post-October 1, 2024. This created several complications.
Issue at Hand
Ans : Claim a Refund for Excess TDS Deducted : According to the Income Tax Department’s TRACES e-tutorial, only TDS deductors (i.e. tenants) can apply for a refund of excess TDS via the TRACES portal. Only the deductor (tenant) can claim the excess TDS refund using Form 26B through the TRACES portal.
Step 1: Login : Visit TRACES Portal. Use TAN login credentials
Step 2: Initiate Refund: Go to: Statement / Payment → Request for Refund
Step 3: Checklist : Review refund eligibility and click “Proceed.”
Step 4: Select Section & Reason: Choose:
Step 5: Enter Challan & Scheme Details: Provide:
Step 6: Bank Details : Enter TAN-linked bank account information.
Step 7: Submit Request : Click “Submit Refund Request.”
Step 8: Upload DSC : Upload a valid Digital Signature Certificate (DSC)
Step 9: Submit Form 26B Acknowledgment : Submit the signed acknowledgment to the TDS Assessing Officer within 14 days (mandatory)
Step 10: Track Status: Go to: Statement/Payment → Track Refund Request and track using
Tenants can file Form 26B online to claim a refund of the excess TDS deducted (3% extra). However, post e-filing, CPC asks tenants to courier the printout of Form 26B acknowledgment to the jurisdictional TDS officer. Tenants are often asked to submit several supporting documents. Documents Typically Required by TDS Officer
Even after submitting all required documents, refunds are granted solely at the discretion of the TDS officer, making the process inconsistent and unpredictable. Now tenants need to be vigilant with TDS rate changes and should retain complete documentation. There is a strong need for a more transparent and standardized refund process under Form 26B.
According to industry experts, TRACES only credits TDS up to the applicable rate, i.e., 2% post October 2024, regardless of the actual 5% deducted and paid.
CA Swatantra Kumar Singh notes Co-founder / Partner of Rajput Jain and Associates : “Even the correction window of Form 16C doesn’t allow manual override to reflect TDS credit beyond 2%.” This causes mismatches in Form 26AS and AIS, confusing landlords during return filing.
According to Swatantra Kumar Singh, Co-founder / Partner of Rajput Jain and Associates: “Tenants can adjust the excess TDS with future rent payments within the same financial year, provided the landlord agrees.” However, this is not automated or enforceable – it requires mutual consent and clear documentation.
If you’ve deducted TDS at 5% instead of the revised 2% rate after October 1, 2024, you must take action promptly. Either coordinate with your landlord for adjustment in future rent payments or follow the refund request process via TRACES. If TDS was wrongly deducted at 5% instead of 2% after October 1, 2024, tenants must act promptly:
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