Section 194-IB of Income Tax Act for AY 2023-24

Section 194-IB of Income Tax Act 1961 amended by Finance Act 2022 and IT Rules. Payment of rent by certain individuals or Hindu undivided family.

Amended and updated notes on section 194-IB of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Payment of rent by certain individuals or Hindu undivided family.

Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 194-IB of IT Act 1961 provides for Payment of rent by certain individuals or Hindu undivided family.

Recently, we have discussed in detail section 194-IA (Payment on transfer of certain immovable property other than agricultural land) of IT Act 1961-2022.

Today, we learn the provisions of section 194-IB of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 194-IB is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 194-IB of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-194-IB: Payment of rent by certain individuals or Hindu undivided family

Section 194IB (1):

Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.

Section 194IB (2):

The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

Section 194IB (3):

The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

Section 194IB (4):

In a case where the tax is required to be deducted as per the provisions of section 206AA or section 206AB, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

[Sub-section(4) of section 194-IB amended (omitted) w.e.f. 1-April-2022 by the finance Act 2022]

Explanation: For the purposes of this section, “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.


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