TDS on Rent: How to get a refund for excess TDS deducted from house rent payments? Here’s a step-by-step guide
If you are paying house rent above Rs 50,000 per month then you need to deduct TDS at 2% rate on the house rental payments from October 1, 2024. However, prior to October 1, 2024 this rate of TDS was 5%. This change in rate of TDS may have caused confusion among tenants as lately there have been increased incidents where tenants who are supposed to deduct TDS at 2% rate before paying rent to the landlord, deducted 5% TDS instead.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
#Pahalgam Terrorist Attack
India stares at a 'water bomb' threat as it freezes Indus Treaty
India readies short, mid & long-term Indus River plans
Shehbaz Sharif calls India's stand "worn-out narrative"
So, October onwards landlord could only get 2% TDS credit but if the tenant deducted 5% TDS by mistake, the remaining 3% TDS amount remained a suspense. Tenants have the option to either seek a refund for such excess payments from the income tax department or ask the landlord for adjusting the excess deduction.
To know more about the excess TDS refund process, a taxpayer can refer to the Income Tax Department’s TRACES website which has an e-tutorial which gives a comprehensive guide to taxpayers who want to get TDS refund for excess deductions made. This e-tutorial by the Income Tax Department aims to address this issue and tell taxpayers how to get a refund for such excess TDS deductions.
Mihir Tanna, associate director, S.K Patodia LLP shares his experience about the excess TDS deduction case: “In one of my friends’ cases he deducted Rs 36,000 TDS when he should have deducted Rs 14,400, so that’s an excess deduction of Rs 21,600 for which he now has to get a TDS refund from the income tax department. But as can be seen, the TDS refund process is a bit complicated and I can only suggest that the Income Tax Department make the whole TDS refund procedure a bit simpler or give credit of excess TDS to deductee. "
How to get a refund for excess TDS deducted?
According to this recently released e-tutorial by the Income Tax Department, only TDS deductors can apply for TDS refund relating to FY 2007-08 onwards.a:hover{text-decoration:none;} .liveEventMain_widget{margin-top:15px;padding-top:24px;border-top:2px solid #000;position:relative;font-family:Montserrat;} .liveEvent_slider{position:relative;overflow:hidden;} .liveEvent_slider ul{white-space:nowrap;list-style:none;margin-top:12px;} .liveEvent_slider ul.sliderContainer{margin-bottom:30px;} .liveEvent_slider ul li{white-space:normal;width:282px;vertical-align:top;display:inline-block;margin-right:12px;border-radius:12px;box-shadow: 0px 4px 12px 0px #2407461F;background-color:#fff;overflow: hidden;} .images_wrap{position:relative;} .images_wrap .cover_img{object-fit:cover;object-position:center;border-top-left-radius:4px;border-top-right-radius:4px;} .images_wrap .author_img{position:absolute;left:10px;top:13px;border-radius:10px;} .images_wrap::before{background-image: linear-gradient(180deg, rgba(11, 11, 46, 0) 20.31%, rgba(11, 11, 46, .6) 61.46%, #0b0b2e);content: "";height: 100%;left: 0;position: absolute;right: 0;width: 100%;} .liveEventMain_widget .details{padding:12px;} .liveEventMain_widget .category{font-size:12px;line-height:14px;font-weight:700;color:#6a11b0;margin-bottom:8px;} .liveEventMain_widget .course_name{font-size:16px;line-height:20px;font-family:Faustina;-webkit-line-clamp:2;overflow:hidden;height:40px;display:-webkit-box;-webkit-box-orient:vertical;font-weight:600;color:#000;} .liveEventMain_widget .details .author_name{font-size:13px;line-height:16px;color:#333;font-weight:400;margin-top:4px;-webkit-line-clamp:2;overflow:hidden;height:32px;display:-webkit-box;-webkit-box-orient:vertical;} .liveEventMain_widget .view{border: 1.5px solid #D51131; display: block; padding: 8px 0; text-align: center; border-radius: 4px; font-size: 14px; line-height: 16px; color: #D51131; margin-top: 12px; width: 100%; font-family: Montserrat; font-weight: 600; cursor: pointer;} .liveEventMain_widget .view span{display: inline-block; width: 6px; height: 6px; border-top: 1.5px solid #ed193b; border-left: 1.5px solid #ed193b; transform: rotate(90deg); position: relative; left: 5px; top: -2px;} .liveEventMain_widget .view span::after{content: ''; display: inline-block; width: 11px; border-top: 1.5px solid #ed193b; transform: rotate(45deg); position: absolute; top: 3px; left: -2px;} .liveEventMain_widget .arrow_btn{width: 26px; height: 25px; position: absolute; z-index: 11; background-size: 312px; cursor: pointer;} .liveEventMain_widget .nextprev-btn{display:inline-block;width: 100%; position: absolute; top: 59%;} .liveEventMain_widget .prev-btn{background-position: -212px -2px;left: -12px;} .liveEventMain_widget .next-btn{background-position: -241px -2px; right: -3px;left:unset;} .liveEventMain_widget .arrow_btn.disable{opacity:0.5;} .liveEventMain_widget .ts-dots{display:inline-block;position:absolute;top:34px;right:10px;} .liveEventMain_widget .ts-dots ul{display:inline-block;} .liveEventMain_widget .ts-dots li{width:7px;height:7px;border-radius:50%;background-color:#cdcdcd;margin:0 2px;display:inline-block;} .liveEventMain_widget .ts-dots li span{display:none;} .liveEventMain_widget .ts-dots li.active{background-color:#ed193b;} .liveEventMain_widget .topContain { display: flex; align-items: center; gap: 6px; } .liveEventMain_widget .topContain .imgBox { max-width: 40px; } .liveEventMain_widget .topContain .logoTitle { font-family: "Montserrat", "Verdana"; font-weight: 700; font-size: 20px; line-height: 100%; } .liveEventMain_widget .topContain .logoSubTitle{ position: relative; font-size: 18px; font-weight: 500; line-height: 1.2; color: #747474; margin-left: 24px; } .liveEventMain_widget .topContain .logoSubTitle:before{ content:''; position: absolute; left: -13px; top: 0; width: 1px; height: 100%; background-color: #838383; } .liveEventMain_widget .liveEvent_slider .liveEventCardContainer{ } .liveEventMain_widget .liveEvent_slider .liveEventCardContainer .liveEventCard{ display: flex; } .liveEventMain_widget .liveEvent_slider .liveEventCardContainer .liveEventCoverImg{ }
Live Events
Chartered Accountant Mayank Mohanka, Partner, SM Mohanka & Associates & Founder- TaxAaram.com, says: "The TDS rate on rental payments made by individuals & HUFs, exceeding Rs 50,000 per month under Section 194IB, has got reduced from 5% to 2% w.e.f. 1.10.2024. In some cases, due to lack of awareness about this rate change, the individual tenants had deducted & deposited the higher TDS @ 5% in place of 2% for the entire year of 2024-25, vide their annual Form 16C & challan 26QC."
Sudhir Kaushik, co- founder & CEO, TaxSpanner says: "The credit will be allowed for the amount deducted and deposited by the landlord, even if it is deducted at a higher rate. In case TDS deducted @5% instead of 2% applicable, the tenant can adjust the extra amount in next month’s of the same financial year. In case the landlord not agreeing to do so or the same cannot be adjusted, then alternative mechanism should be used."
Tanna says, individual taxpayers deducting TDS on rent have no option but to take a refund for such excess TDS deduction, unlike other taxpayers who have the option to adjust such excess TDS deduction for the earlier/same/next year. "In another case when we applied for refund on excess TDS on property; after filing the application we have been asked to provide additional documents like indemnity bond, bank statement," says Tanna.
Things to know about refunds of excess TDS deducted
It is mandatory to register the digital signature of authorized persons on TRACES to submit the Refund Request.PAN of Deductor as per TAN Master and TRACES profile should be same and non-blank.No Outstanding demand should be present against TAN and against any TAN(s) associated with PAN of Deductor (if available).No Outstanding demand should be present against PAN of Deductor.A refund request consists of a maximum of Five Challans. For more than five 5 Challans, the Deductor needs to raise a new refund request.Maximum refund amount will be the available unclaimed balance amount in the Challan history.Refund requests can be raised for those Challans where the unclaimed amount is greater than Rs. 100.00 per Challan.Ensure that all statements in which the challan has been claimed should be processed before claiming refund for the challan.Landlords will get credit of 2% TDS only, even if tenant deducted 5% TDS
Mohanka says: "As per the law, the full TDS credit of actual TDS deducted & deposited by tenants (even if higher than applicable rate) should be reflected in Form 26AS of respective landlords, and which can be claimed by them while filing their ITRs. However, strangely in Form 26AS of such landlords, corresponding TDS credit @ only 2% is being reflected. This appears to be due to a technical glitch in the TRACES utility which got updated to incorporate the TDS rate change. Even the correction window of Form 16C doesn't have any option to manually override the TDS credit amount in excess of 2% on actual deposition basis. This faulty TDS utility, is causing undue hardships to the landlords, and so should be rectified immediately, to reflect the full TDS credit on actual deposition basis & not on the basis of applicable TDS rate."How do you get a refund for excess TDS deducted?
According to the e-tutorial, here’s a step-by-step guide:Step 1: Step 1: Login to TRACES website and go to “Request for Refund” under “Statement Payment” tab.
Step 2: Go to the refund checklist and click on “Proceed”.
TDS on house rentSource: Income Tax Department e-tutorial
Step 3 : Please select Section code: ➢ Refund Request for Challan u/s 195 ➢ Refund Request for Challan other than sec. 195 ➢ Select Appropriate reason for raising the Refund Request, Click on “ Add Challan” after selecting appropriate reason.
TDS on Rent TRACESSource: Income Tax Department e-tutorialStep 4 : Give Challan details & select Whether Challan pertains to appeal order or Whether Challan pertains to Vivad se Vishwas Scheme then enter appeal order number/ Vivad se Vishwas Scheme number received from appellate authority.
Step 5: Provide Bank Account details to proceed with the request.
Step 6: Verification page : Click on “Proceed” to continue TDS refund request.
Step 7: Confirmation Page : Click on “Submit Refund Request” to continue TDS refund request.
Step 8: Select a “Digital Signature Certificate” to proceed further
Step 9: Form No. 26B Acknowledgement must be submitted within 14 days to the Assessing officer. Note: Refund request will be transferred to ADC approval (if refund amount is exceeding Rs. 50 Lakh)
Step 10: Request will be available under “ Track refund Request”.
Step 11: Under “Track Refund Request” select search “Option 1 or Option 2” to view Refund Status with remarks.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
