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TDS on rent — Sections 194-IB & 194-I (2026)

TDS (Tax Deducted at Source) on rent is a withholding tax that the tenant deducts before paying the landlord and deposits with the government against the landlord\'s PAN. It applies at different rates and thresholds depending on whether the tenant is an individual or a business.

Section 194-IB vs Section 194-I

Section 194-IBSection 194-I
Applies toIndividuals / HUFs not under tax auditBusinesses, companies, firms, individuals under audit
ThresholdMonthly rent > ₹50,000Annual rent > ₹2,40,000
TDS rate5%10% (land/building), 2% (plant/machinery)
FrequencyOnce a year (March or end of tenancy)Monthly
FormForm 26QC, certificate Form 16CChallan ITNS 281, certificate Form 16A
TAN required?No — use PANYes — deductor must have TAN

How to pay TDS under 194-IB (individual tenants)

  1. Go to tin.tin.nsdl.com and select Form 26QC.
  2. Enter landlord\'s PAN, tenant\'s PAN, property address, tenancy period and rent.
  3. System calculates 5% TDS on total rent paid.
  4. Pay online via Net Banking or debit card.
  5. Download the acknowledgement and Form 16C within 5 business days.
  6. Hand Form 16C to the landlord within 15 days.
Penalty for non-deduction: Under Section 201, a tenant who fails to deduct TDS is liable for the TDS amount plus interest at 1–1.5% per month, and cannot claim the rent as a deduction from income. Non-payment beyond 12 months can attract prosecution under Section 276B.

What if the landlord has no PAN?

Under Section 206AA, if the landlord has not furnished a PAN, TDS must be deducted at the higher of 20% or the rate specified in 194-IB/194-I. The landlord will not be able to claim credit for this TDS without a PAN — which is why every rent agreement should capture the landlord\'s PAN upfront.

FAQs

What is TDS on rent?

TDS (Tax Deducted at Source) on rent is a tax withholding requirement under the Income Tax Act where the tenant deducts a percentage of the rent before paying the landlord, and deposits it with the government against the landlord's PAN. The landlord can then claim credit for the TDS when filing their income tax return.

Who has to deduct TDS on rent?

Under Section 194-IB, any individual or HUF tenant paying monthly rent of more than ₹50,000 must deduct TDS at 5% once a year (in the last month of tenancy or March, whichever is earlier). Under Section 194-I, businesses and companies paying annual rent over ₹2,40,000 must deduct TDS monthly — at 10% for buildings/land and 2% for plant/machinery.

How do I pay TDS on rent?

For individual tenants under 194-IB: use Form 26QC on the TIN-NSDL portal, pay online, and give Form 16C to the landlord within 15 days. For businesses under 194-I: deduct monthly, deposit by the 7th of the following month via Challan ITNS 281, and issue Form 16A quarterly.

Can TDS on rent be claimed back?

Yes. The landlord includes the rent as income and claims the TDS as a pre-paid tax credit when filing their income tax return. If total tax liability is less than the TDS, the landlord gets a refund.

Related: HRA exemption · Rent receipt for HRA