Need Help: Goofed Up TDS Deduction on Rent – Looking for Ways to Fix It

Taxation
1

Sharing my (slightly embarrassing) situation here in hopes that the collective wisdom of this forum can help me figure out the best way to fix things.

So here’s the tale of a well-meaning tenant who tried to befriend the tax gods but tripped on the math.

I’m a tenant diligently paying rent—and just as diligently trying to comply with TDS rules.

I don’t deduct TDS on monthly basis … i just do it once at the end of the FY… Fast forward to March 2025, I did a one-shot calculation, deducted the (annual) TDS…

From Apr to Sept 2024, I played it by the book and calculated TDS at 5%. But from Oct 2024 to Mar 2025, I goofed up and deducted only 1%, thinking I was doing the math right.

Honestly, I tallied everything up, still blissfully unaware & deducted what I thought was the right amount. Filed the heroic Form 26QC in April 2025, feeling like I nailed it. Then—plot twist—I just realised I’d been short by 1% for half the year.

Last year, I had no problems since standard 5% TDS rate applied thru the year… Hell! can’t even blame it on brain freeze or a system glitch! This time i made the mistake because i thought i read the new TDS rate from Oct 2024 as 1% instead of 2% in Budget 2024… Funnily enough, even CAs are not completely aware of the TDS rate change etc… I didn’t bother cross-checking & went with the flow. Moral of the story: always always cross check & don’t rely on memory.

Now that I’ve had my “oops” moment, I realise I under-deducted by 1% for six months (Oct 2024 to Mar 2025).

What’s the best way to course-correct this without landing in the TDS hall of shame?

Can I deposit the differential TDS now for those six months? Do I file separate 26QCs or one consolidated one?
How do I handle interest on the shortfall? Anything I should inform my landlord about from a Form 26AS or credit perspective?

Would love to hear from anyone who’s been through this or knows how to untangle it!

P.S. If there’s a special place in the TDS afterlife for honest mistakes and corrected forms, I’d like to apply for early admission. Preferably with coffee and no penalties.

@Quicko pls help

2

Hello @sufimonks

We understand your situation. Here are a few facts that you need to consider:

  1. Form 26QC is filed once at the end of the year or at the time of vacating the property within 30 days.
  2. The total TDS to be deposited for the FY 2024-2025 is 2% of the rent or the last month’s rent, whichever is lower.

Now, as per your calculation, you have paid 5% for the first 6 months and 1% for the other 6 months.
In actuality, your total liability is @2% of the total rent amount. Therefore, there might not be a short deduction in this case. In case of a shortfall in the payment of TDS, you would have received a demand from the department.

You can verify the status of your statement and challan by logging in (first sign-up if not already) to TRACES. In case of demand, you can simply pay the demand of short deduction along with interest on the [Income Tax Portal]e-Filing Home Page, Income Tax Department, Government of India.

Thank you.

3

Oh wow! So no need to split between 5% and 2% after all? Looks like my accidental tax math actually worked?!

Me right now: Classic Jim face <I can’t believe it vibe>

I’ll hop onto TRACES now & double-check for any lurking demand notices

@Quicko you guys are amazing! Really appreciate your quick & helpful response. You saved me from overthinking myself into a tax-time existential crisis!

Cheers & thanx again! :smile:

4

so I was not the only one who goofed up …

Mint has covered this here:

Getting a refund of excess TDS on rent deposited by tenants is harder than it’s supposed to be | Mint

TL/DR: The article from Mint discusses challenges tenants face when seeking refunds for excess TDS on rent payments. A significant issue arises from the reduction of the TDS rate from 5% to 2% effective 1st oct 2024, which many tenants may not have noticed. Consequently, some tenants continued deducting TDS at the previous rate, leading to overpayments.

The primary complication in obtaining refunds stems from discrepancies in the TRACES utility, which records TDS credits. Even if tenants deducted and deposited TDS at the higher rate, only the 2% credit is reflected in Form 26AS, complicating the refund process.