Understanding the Differences Between Section 194-I and 194IB in India

Learn the key differences between TDS under Section 194-I and 194IB for rent payments in India.

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Section 194-I refers to the TDS (Tax Deducted at Source) on rent payments in India by individuals and entities, whereas Section 194IB pertains to TDS on rent paid by individuals or HUFs (Hindu Undivided Family) who are not subject to tax audit. 194-I requires rent above ₹2,40,000 per year to be liable for TDS, while 194IB applies when the monthly rent exceeds ₹50,000.

FAQs & Answers

  1. What is Section 194-I of the Income Tax Act? Section 194-I refers to the Tax Deducted at Source (TDS) applicable on rent payments exceeding ₹2,40,000 per year in India, which must be deducted by individuals and entities.
  2. What does Section 194-IB cover? Section 194-IB specifically pertains to TDS on rent payments made by individuals or Hindu Undivided Families (HUFs) not subject to tax audits, applicable when monthly rent exceeds ₹50,000.
  3. How is TDS computed under Section 194-I and 194-IB? Under Section 194-I, TDS is calculated at 10% on the annual rent exceeding ₹2,40,000, while Section 194-IB requires a 5% TDS on monthly rent that exceeds ₹50,000.
  4. Who is responsible for deducting TDS under these sections? For Section 194-I, any individual or entity paying rent exceeding ₹2,40,000 annually must deduct TDS. For Section 194-IB, individuals or HUFs paying rent above ₹50,000 monthly have to ensure TDS is deducted.

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