New Delhi, June 6 -- Certain payments made by individuals attract tax deduction at source (TDS), but many are unaware of it. For instance, 2% TDS applies to rent exceeding Rs.50,000 per month, 1% on property purchases above Rs.50 lakh, and a similar rule applies to high-value freelance or contract payments.

The income tax department has been tracking individuals who failed to comply with these TDS rules. Taxpayers who claimed HRA exemption while paying rent above Rs.50,000 received SMS and email alerts from the I-T department. The penalty for non-compliance is steep.

Tenants who did not deduct TDS on rent under 194-IB can avoid these penalties by proving that the landlord has paid tax on the rental income. This is done by filing Form 26...