Taxpublishers.in - Monday Corner Answer to the Quiz for the week (19 May 2025)

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Quiz for the week (19 May 2025): Mukesh a resident individual employed in MM Ltd occupied a rental premises for a monthly rent of Rs.55,000 from 1st April,2024 to 31st August, 2025 and later @Rs.70,000 up to 31st March, 2025. How much is the amount of tax deductible by Mukesh out of the rent paid? Best Answer : Section 194-IB says that any person being an individual or HUF (other than those referred to in the second proviso to section 194-I) responsible for paying a resident any income by way of rent exceeding Rs.50,000 per month or for part of the month during the previous year, shall deduct 2% of such sum as income-tax thereon. The rate of TDS was 5% up to 30.09.2024 and it became 2% vide amendment made by the Finance (No.2) Act, 2024 w.e.f. 1st October, 2024. In this case, the rent paid was Rs.55,000 per month for 5 months i.e. from 01.04.2024 to 31.08.2024 and it was Rs.70,000 per month for 7 months i.e. from 01.09.2024 to 31.03.2025. The aggregate rent paid by Mukesh during the year amounts to Rs.7,65,000 (Rs.2,75,000 +Rs.4,90,000). Since the monthly rent exceeded Rs.50,000 throughout the previous year 2024-25 the provisions of section 194-IB get triggered. Mukesh has to deduct 2% of Rs.7,65,000 being Rs.15,300 out of the rent payable for the month of March, 2025. In case, the landlord has not furnished PAN the provisions of section 206AA would apply and tax has to deducted at source @20% instead of 2%. In case, the landlord has not given his PAN the tax deductible would be @20% of Rs.7,65,000 being Rs.1,53,000. However, as the monthly rent for the month of March, 2025 is only Rs.70,000 the amount of TDS shall be limited to Rs.70,000 instead of Rs.1,53,000.

Quiz for the week (19 May 2025):

Mukesh a resident individual employed in MM Ltd occupied a rental premises for a monthly rent of Rs.55,000 from 1st April,2024 to 31st August, 2025 and later @Rs.70,000 up to 31st March, 2025. How much is the amount of tax deductible by Mukesh out of the rent paid?

Best Answer :

Section 194-IB says that any person being an individual or HUF (other than those referred to in the second proviso to section 194-I) responsible for paying a resident any income by way of rent exceeding Rs.50,000 per month or for part of the month during the previous year, shall deduct 2% of such sum as income-tax thereon. The rate of TDS was 5% up to 30.09.2024 and it became 2% vide amendment made by the Finance (No.2) Act, 2024 w.e.f. 1st October, 2024.

In this case, the rent paid was Rs.55,000 per month for 5 months i.e. from 01.04.2024 to 31.08.2024 and it was Rs.70,000 per month for 7 months i.e. from 01.09.2024 to 31.03.2025. The aggregate rent paid by Mukesh during the year amounts to Rs.7,65,000 (Rs.2,75,000 +Rs.4,90,000). Since the monthly rent exceeded Rs.50,000 throughout the previous year 2024-25 the provisions of section 194-IB get triggered.

Mukesh has to deduct 2% of Rs.7,65,000 being Rs.15,300 out of the rent payable for the month of March, 2025.

In case, the landlord has not furnished PAN the provisions of section 206AA would apply and tax has to deducted at source @20% instead of 2%. In case, the landlord has not given his PAN the tax deductible would be @20% of Rs.7,65,000 being Rs.1,53,000. However, as the monthly rent for the month of March, 2025 is only Rs.70,000 the amount of TDS shall be limited to Rs.70,000 instead of Rs.1,53,000.