Renters and Landlords Take Note: Income-Tax Act Revamps Rental Deductions

Published on: Mon Jan 08 2024

Kapil Sharma

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Kapil Sharma, a second-year Bachelor of Commerce (Honours) student at Shaheed Bhagat Singh College, University of Delhi. Beyond academics, I'm a freelance writer with publications in Asiana Times. My journey blends commerce and creativity as I navigate both the academic and freelance worlds, contributing my unique perspective to each endeavor.

The Income-Tax Act (ITA) has undergone a makeover, specifically for rental income and tax deductions. Here's a quick rundown of the new rules that landlords and tenants need to know:

Two Rates for Taxes: Say goodbye to the one-size-fits-all approach! The ITA now has two distinct TDS rates based on the property type:

Light on the Machinery: Renting out equipment? You'll be happy to know the TDS rate is just 2%.

Bricks and Mortar Matter More: For land, buildings, and furnishings (think apartments, offices, even furniture rentals!), the TDS rate jumps to 10%.

Small Rents, Big Relief: Breathe easy if your annual rent falls below Rs. 1.8 lakh. You're exempt from TDS!

High Earners, High Responsibility: Individuals and Hindu Undivided Families (HUFs) with higher incomes (as defined in Section 44AB(a) or 44AB(b) of the ITA) must deduct TDS on rent, even if it's below Rs. 1.8 lakh.

Rent Gets Broader: The definition of "rent" has expanded to include payments made under various agreements, like leases, sub-leases, and more, for land, buildings, and even equipment.

Compliance is Key: These changes apply to everyone, not just individuals and HUFs. Make sure you comply with the new rates and limits to avoid legal trouble.

Stay Informed: The full details are in the updated ITA, but don't hesitate to consult a tax advisor for specific guidance.

Remember, these new norms are here to streamline tax collection. By understanding and complying, you can ensure a smooth and hassle-free rental experience for everyone involved.

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