Is your house rent more than Rs 50,000? If yes then there’s an important update you should know. Starting October 1, 2024, the TDS (Tax Deducted at Source) on such rent payments has been reduced from 5 per cent to 2 per cent. However, many tenants are still deducting the old 5 per cent rate by mistake which leads to confusion and possible issues for both tenants and landlords. Here’s what you need to know to avoid such errors.

What if a tenant deducts 5% TDS by mistake?

Starting October, landlords are supposed to receive only 2 per cent TDS credit on rent. However, if a tenant accidentally deducts 5 per cent the extra 2 per cent ends up in limbo. In such cases, tenants can either request a refund of the excess amount from the income tax department or coordinate with the landlord to adjust the extra deduction.

Taxpayers can visit the income Tax Department TRACES website to understand how to claim a refund for excess TDS deductions. It features a helpful e-tutorial that guides you step-by-step through the refund process. This tutorial is designed to make it easier for taxpayers to resolve issues related to extra TDS deductions.

How to Get a Refund for Excess TDS Deducted: A Step-by-Step Guide

(As per Income Tax Department’s TRACES e-tutorial)

Step 1: Log in to the TRACES website and click on “Request for Refund” under the “Statement Payment” tab.

Step 2: Review the refund checklist and click “Proceed”.

Step 3: Select the appropriate Section Code:

– Refund Request for Challan u/s 195
– Refund Request for Challan other than sec. 195

Choose the correct reason for refund

Click “Add Challan”

Step 4: Enter Challan details and select whether it relates to an appeal order or the Vivad se Vishwas Scheme, then enter the relevant reference number.

Step 5: Provide your bank account details to receive the refund.

Step 6: On the verification page, click “Proceed”.

Step 7: On the confirmation page, click “Submit Refund Request”.

Step 8: Select your Digital Signature Certificate (DSC) to authenticate the request.

Step 9: Submit Form 26B Acknowledgement to the Assessing Officer within 14 days.
Note: If the refund amount exceeds Rs 50 lakh, it will be sent for ADC approval.

Step 10: Track the status of your request under “Track Refund Request”.

Step 11: Choose Option 1 or Option 2 in the search bar to view refund status with remarks.