In the past decades, you can see a high growth of the Non-Resident Indian (NRI) investment in the real estate of India. You can easily find out that the posh localities in the Indian cities are owned by the non-resident Indians and offered for rent. If you also have an NRI landlord then it is essential for you to have knowledge about the things like TDS and take other responsibilities while paying your rent.
Here are some things that you need to know while deducting TDS with NRI landlord:
Deduct TDS
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Every time while paying the monthly rent to your NRI landlord, it is essential for you to deduct TDS (tax deducted at source) at the rate of 30 per cent under section 195 of the Income Tax Act. In addition to this, education cess is also a part of the overall tax liability, so the total deduction would be almost 31.2%. As a tenant, you have the responsibility to carry out this task in the best effective manner and you have to report it to the Income Tax Department. There is no lower limit of the TDS deduction as even if your monthly rent is ₹ 5,000, you have to deduct TDS.
You need a TAN to deduct TDS from NRI Landlord
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First of all, as a tenant, you need to have a Tax Deduction and Collection Account Number that is also known as the TAN number. The tenant can also obtain it through the NSDL website online with great comfort and convenience. Once the TAN number is issued then it becomes easy for the tenant to deduct the amount of tax every month and able to pay it online. You can also use this 10 digits alphanumeric identity such as TAN to undertake all the business regarding TDS with the Income Tax Department. In addition to this, you must also have a Permanent Account Number (PAN) card. Apart from this, the PAN of your landlord is also required to conclude the business in a smooth and effective manner. So, these are the things you will require to deduct TDS on rent if from your NRI Landlord
Fill the right form
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As you are sending money out from India, it becomes essential for you to seek the help of a charted accountant who has the proper knowledge to fill the right form inaccurate way and helps to submit it online. There are two types of forms available that is required to fill by that tenant with an NRI landlord.
As a tenant, it becomes important for you to fill the Form 15CA if the annual transaction amount does not exceed Rs. 2.5 lakh and the single transaction amount does not exceed the Rs. 50,000. If your landlord receives the certificate from the Income Tax Department for directing you to reduce the tax deduction then you have to fill the same form 15CA.
Apart from this, you have to fill the Form 15CB if the annual amount exceeds Rs. 2.5 lakh in the financial year and the single transaction amount exceeds Rs. 50,000. In Form 15CB, there are lots of details are mentioned regarding the TDS rate, the DTAA (Double Tax Avoidance Agreement) and the deductions. An NRI may be also liable to pay the amount of taxes in the country where he has a residence, so these details will them avoid it.
Credit money in the right account
It is essential for you to consider that the money has to be deposited into the non-resident ordinary account of your landlord. It is not possible to credit the money into the non-resident rupee account because as long as you too are an NRI.
Issue a certificate
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Once after deducting the TDS, you should provide the TDS certificate to your Non-resident Indian landlord for the income tax purpose. Your landlord can easily check out the TDS details from the Form 26AS.
So, with the help of this above-mentioned information, you mage get to know that how can you deduct TDS on rent if your landlord is an NRI. You can easily deposit the money of TDS with the online method and it becomes easy for you to pay your monthly rent along with the TDS. Now, it becomes easy for you to get the detailed information regarding the deduction of TDS on the rent if your landlord if an NRI as you can easily explore it on the online platform. Whenever you are going to deduct TDS on the rent, it is essential for you to consider all things carefully and make sure that you do not have made any mistake.
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