On 9 June 2017, Govt made it compulsory to deduct 20% TDS if annual rent cross Rs1.2 Lakhs and deposit the deduction within 30 days to govt.
The CBDT in its gazetted notification made it clear that the deduction can not keep the money so collected under 194-1B of Income Tax Act. It has to be deducted every month and paid to the govt account.
The Income Tax rules have defined “Rent” as any payment by whatever name called towards any lease, license, sub lease, tenancy or any other arrangements for use of land, building, factory building together with furniture, fittings and land appurtenant.
The Income Tax (13th Amendment) Rules 2017, issued through the gazette notification requires the tenant to not only deduct 20% TDS on monthly rent and deposit to Govt but also issue Form 16C within 15 days of furnishing the challans cum statement which will be self generated on IT website.
The notification said that tenant has to issue certificate which will be generated and download from Income Tax department portal.
It is also mandatory for tenant to furnish details of deduction to the Income Tax Department electronically.
If you fail to issue such certificate as tenant then you are not eligible for deduction of rent or HRA from your taxable income.