TDS refund on rent 2024 is a hot topic for thousands of Indian tenants who mistakenly deducted 5% TDS instead of the revised 2% rate after October 1, 2024. If you’re one of them, this complete guide shows you how to fix it quickly through the TRACES portal.
What is TDS on Rent?
TDS (Tax Deducted at Source) on rent is applicable when a tenant pays more than ₹50,000 in monthly rent. In such cases, the tenant must deduct TDS before making the rent payment and deposit it with the government. This ensures that the tax is collected at the source of income.
Understanding Section 194-IB
Who Does It Apply To?
Section 194-IB applies to individuals or HUFs (Hindu Undivided Families) who are not subject to tax audits. If you’re a salaried individual paying rent over ₹50,000 a month, you’re obligated to deduct TDS—even if you’re not running a business.
Tenant’s Duties
Tenants must:
- Deduct the applicable TDS
- Deposit it using Form 26QC
- Provide Form 16C to the landlord as proof of TDS deduction
What Changed from October 1, 2024?
The government reduced the TDS rate on rent payments from 5% to 2%. However, due to a lack of awareness, many tenants continued deducting 5%, resulting in an excess 3% deduction that now sits idle unless a TDS refund on rent 2024 is claimed.
Consequences of Over-Deducting TDS
For Landlords
Landlords can only claim credit for 2% TDS in their Form 26AS. The remaining 3% cannot be claimed unless the tenant corrects the error.
For Tenants
You’re responsible for the excess deduction. Fortunately, you can file a TDS refund on rent 2024 request to recover the extra amount.
Who Can Claim the TDS Refund on Rent 2024?
Only the tenant (TDS deductor) is allowed to file a TDS refund on rent 2024 claim. Landlords are not eligible to apply for a refund—even though the deduction is from their payment.
How to Settle the Excess TDS
Option 1: File a TDS Refund on Rent 2024 Request
Submit a request on the TRACES portal if you meet all the eligibility criteria.
Option 2: Adjust with Your Landlord
Mutually agree to reduce future rent by the over-deducted amount.
Step-by-Step Guide to File TDS Refund on Rent 2024 via TRACES Portal
- Login to TRACES
Access the TRACES website and log in with your TAN credentials. - Verify PAN and TAN
Ensure all details are accurate and updated. - Select Refund Type
Choose “Refund Request for Challan other than Section 195” and select the correct reason (e.g., Excess Deduction). - Enter Challan Details
Provide details of the excess-paid challan. - Provide Bank Details
Enter the account where you want the refund to be credited. - Verify and Submit
Double-check all entries and submit your TDS refund on rent 2024 request. Save the acknowledgment.
Mandatory Requirements Before Filing TDS Refund on Rent 2024
- No outstanding tax demand on your PAN/TAN
- PAN and TAN must be updated in TRACES
- DSC (Digital Signature Certificate) must be registered on TRACES
Common Mistakes to Avoid in TDS Refund on Rent 2024
- Selecting the wrong section
- Providing incorrect challan or bank details
- Not verifying PAN/TAN details
What If Your TDS Refund on Rent 2024 Gets Rejected?
- Recheck and correct your details
- Reapply through TRACES
- Contact TRACES Helpdesk or raise a grievance on the Income Tax portal
Refund Timeline
TDS refunds are typically processed within 30–45 days, but delays may occur due to discrepancies or verification issues.
Tips to Avoid TDS Errors in Future
- Subscribe to tax news and updates
- Use automated rent payment tools that auto-calculate TDS
- Always verify the latest tax rules before making deductions
Expert Insights
CA Mayank Mohanka highlights that awareness and timely action are crucial. Over-deductions usually happen due to a lack of updated information.
Legal Implications of TDS Refund on Rent 2024
While there’s no penalty for over-deducting TDS, repeated mistakes may lead to disputes with landlords and tax compliance issues.
FAQs
- Can the landlord apply for the refund?
No. Only the tenant (deductor) can file for the TDS refund on rent 2024. - What documents are required?
Challan details, PAN, TAN, bank info, and a registered DSC. - Is there a deadline?
No fixed deadline, but applying within the financial year is recommended. - Will excess TDS reflect in Form 26AS?
Yes, but only the usable 2% will be shown as available credit. - Can excess TDS be adjusted in rent?
Yes, if both tenant and landlord agree.
