If you’re a tenant paying monthly rent above ₹50,000, you’re likely aware of the requirement to deduct TDS under Section 194-IB of the Income Tax Act. This tax is paid via Form 26QC, which acts as both a challan and a statement of deduction.
TDS Rate Change under Section 194-IB
Effective 1st October 2024, the TDS rate on rent under Section 194-IB was reduced from 5% to 2%. However, many tenants continued deducting tax at 5% due to unawareness of this mid-year revision. As a result:
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Tenants paid excess TDS at 5%.
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Form 26QC was filed with the old 5% rate.
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Landlords received credit for only 2%, leading to a mismatch in the TDS records.
What Happens to the Extra 3% TDS Paid?
Since the government only allows credit of 2% to landlords (as per the revised rate), the extra 3% deducted is considered excess TDS. The good news is that tenants can claim a refund of the excess TDS through Form 26B on the TRACES portal.
Step-by-Step Guide to Claim Excess TDS Refund through Form 26B
Follow these steps to file your refund request:
✅ Step 1: Login to TRACES Portal
Visit the TRACES website and log in using your credentials.
✅ Step 2: Initiate Refund Request
Go to the “Statements / Forms” tab and click on “Request for Refund (For Forms 26QC)”.
✅ Step 3: Review the Checklist
Carefully read through the checklist provided. Once done, click “Proceed”.
✅ Step 4: Select the Reason
Choose at least one valid reason for claiming the refund, then click on “Add Challan”.
✅ Step 5: Provide Challan Details
Enter the challan details where excess TDS was deposited.
✅ Step 6: Verify Challan Consumption
Check the consumption details of the challan. Tick the declaration box and click “Proceed”.
✅ Step 7: Enter Bank Details
Provide accurate bank account details for refund credit and proceed.
✅ Step 8: Verify Details
You’ll be directed to a verification page. Review all details and click “Proceed”.
✅ Step 9: Submit Refund Request
Click on “Submit Refund Request”. A pop-up will prompt you to verify the request via Digital Signature (DSC) or Aadhaar-based OTP.
✅ Step 10: Print Acknowledgement
Once submission is successful, click on “Preview and Print Form 26B Acknowledgement” for your records.
✅ Step 11: Track Refund Status
Go to “Track Refund Request (For Forms 26QB/26QC/26QD)” and use any of the search options to view the status and remarks of your request.
Important Notes:
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Only tenants who mistakenly deducted 5% TDS after 1st October 2024 are eligible.
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Ensure correct bank details to avoid refund rejections.
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Refunds are typically processed within a few weeks of submission, subject to verification.
Conclusion: Mistakenly deducted 5% TDS on rent after 1st October 2024? Don’t worry. The process to claim a refund for the excess 3% TDS is straightforward via Form 26B on the TRACES portal. Ensure timely action to avoid fund blockage and maintain proper records for future reference.
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