Tax Query: Are rental payments liable to tax deduction at source (TDS)?
TDS return

I am salaried, and I pay rent of Rs 35,000 per month to my landlord, who is a resident individual. I separately pay maintenance charges of Rs 2,500 per month. Am I required to deduct tax on the rental payments? 

A salaried individual should deduct tax (TDS) on rental payments to a resident only if the rent paid per month exceeds Rs 50,000. In a case where there is a TDS liability, the tenant should deduct 5% as TDS, make a remittance to the government, and file a TDS return in Form 26QC. The tax deduction should be in the last month of the financial year or in the previous month of the tenancy, whichever is earlier. In a case where the maintenance charges are collected separately under the rental agreement, there is no TDS liability on the maintenance charges paid. 

In case of rental payments by salaried individuals to a resident below Rs 50,000 per month, the tenant is not liable to deduct tax (TDS) on the payments.

Also Read: Tax Query: How are the flexi pay components in my salary taxed?

I am planning to redeem units of an equity mutual fund held by me for the past five years. I wish to know the tax implication on the redemption, and whether there is a TDS on the redemption? 

The units of an equity fund are long-term capital assets for a holding period greater than one year, resulting in capital gains or losses. In case you have long-term capital gains, there is no tax liability where the aggregate long-term capital gains from your equity holdings do not exceed Rs 1 lakh for a financial year. The long-term gains above of Rs 1 lakh get taxed at 10%.

The mutual fund is not required to deduct tax on the redemption of the units. You should estimate and pay the taxes due on the capital gains during the financial year. In a case you have long-term capital losses, you can set-off the losses against any other long-term capital gains for the ongoing fiscal year. You are entitled to carry forward any balance losses for the next eight years. 

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in

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