Income tax department issues notice to taxpayers that rent of Rs 50,000 or more is not deducted from TDS

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A tax expert said the income tax department has issued notices to taxpayers that these taxpayers pay Rs 50,000 or more monthly rents and undeducted taxes (TDS) while deducting landlords.

Many taxpayers have received notices from the Income Tax Department related to the 2023-2024 and 2024-25 years of assessment, stating that you have filed a Home Rent Allowance (HRA) claim within a specific year without TDS deductions. The notice also states that if you want to reduce your claims to submit an update’s return, this is the right time to do this.

He said the notices have been sent to several taxpayers across the country.

“If you are a tenant of a specific property and you are paying Rs 50,000 or more rent, the Income Tax Act provides that as a tenant you are deducting 2% of the TDS (TDS effective from October 2024 (from 5% from earlier), you are paying 5% of the rent) and you are paying to the landlord,” said Mr Abishek.

“If the tenant fails to do so, the person is deemed to be assessed in the default. Then you will be subject to certain interest, fines and fines from the income tax department, which may be levied from 1-1.5% per month depending on the individual cases and times of default,” he said.

“This is an exemption for this. The landlord filed an income tax return and showed rental income, if the tax was already calculated on the same tax, and if you are able to provide the information to the assessment officer, it will not be considered the assessee by default and there is no interest or penalty required.”

“However, some landlords may be reluctant to share certain confidential/private documents. Therefore, it is recommended that all assessees deduct and remittance TDs in a timely manner to comply with the law and avoid breach of contract with the assessee.”