Hey @Kunik ,
You’re not alone, many taxpayers have received this email from the Income Tax Department (ITD) about their HRA (House Rent Allowance) claim and TDS on rent.
Why did you receive this email?
The ITD noticed two things:
- You claimed HRA in your Income Tax Return (ITR).
- No TDS was deducted on the rent paid.
They are specifically referring to Section 194-IB of the Income Tax Act, which requires individuals or HUFs to deduct 5% TDS if monthly rent exceeds ₹50,000. Since your records show a high rent but no TDS deduction, they’ve flagged this and sent you the email.
What are your options?
You have two ways to address this issue,
Option 1: File the TDS return (Form 26QC)
If your monthly rent was indeed above ₹50,000, you’ll need to:
- Deduct and pay :
- 5% TDS on the rent paid
- 1.5% interest per month (from the rent payment date till TDS payment)
- late filing fee of ₹200 per day (capped at the total TDS amount)
- File Form 26QC online, along with that make the payment considering the TDS, interest and late filing fees calculated as above.
Ensure your landlord’s PAN & Aadhaar are linked. If they aren’t, the TDS rate increases to 20% instead of 5%, which could result in a notice for short deduction.
After TDS is paid and reported, your landlord can file a rectification request to claim refund of the TDS amount.
Option 2: File an Updated Return (ITR-U)
If you’ve incorrectly claimed HRA you can:
- File an Updated Return (ITR-U) for the relevant assessment years.
- Recalculate your HRA as per the income tax rules.
- Pay any additional tax along with the applicable penalty under ITR-U.
You have until 31st March 2025 to file an updated ITR. It’s best to act early to avoid further interest or penalties.
We also made a detailed video covering more nuances around this.