Sec 194-IB — the tenant's TDS on rent > ₹50K/month
Individuals and HUFs not liable to tax audit who pay rent above ₹50,000 a month deduct TDS under Sec 194-IB — at 2% from 1 October 2024 (5% before). The tenant deducts once a year, in March or the month the tenancy ends, pays it through Form 26QC and gives the landlord Form 16C.
The headline rules
- Who deducts: An individual or HUF tenant (not under Sec 44AB tax audit).
- Threshold: Rent > ₹50,000 per month.
- Rate:
- Until 30-Sep-2024: 5%.
- From 1-Oct-2024 (FA 2024): 2%.
- If landlord's PAN inoperative / not furnished: 20% under Sec 206AA.
- Frequency: Once a year (in March), or at vacating (whichever is earlier).
- Form: 26QC (challan + statement combined).
- Certificate to landlord: Form 16C, within 15 days of 26QC filing.
What "rent" includes
Per Explanation to Sec 194-IB, "rent" means any payment for use of:
- Land or building (including factory building).
- Land appurtenant to a building.
- Furniture or fittings.
- Plant or machinery (excluding plant/machinery covered under Sec 194-I).
Hotel accommodation in regular course of stay is generally NOT rent. Long-term hotel residence may attract Sec 194-I (if tenant is non-individual / firm / company under audit).
The threshold: per-month, not annual
Sec 194-IB triggers when monthly rent > ₹50,000 — NOT annual rent > ₹6,00,000. So:
- Tenant paying ₹52,000 / month for 12 months = trigger.
- Tenant paying ₹48,000 / month for 12 months = no trigger (even though annual is ₹5.76L).
- Tenant paying ₹60,000 / month for 6 months (mid-year vacating) = trigger.
- Tenant paying ₹55,000 / month for 1 month then ₹45,000 thereafter = trigger for the year (any single month crossing ₹50K).
How to compute TDS
Deduct TDS on the total rent paid for the year (or part year if vacating mid-year). Example:
- Rent ₹60,000 / month, 12 months = ₹7,20,000 annual rent.
- TDS @ 2% (post 1-Oct-2024) on ₹7,20,000 = ₹14,400.
- Tenant pays landlord ₹7,20,000 − ₹14,400 = ₹7,05,600 net over the year. Or: tenant deducts ₹14,400 from March rent.
The rate change mid-year (FY 2024-25)
For FY 2024-25, rent paid before 1-October-2024 is at 5%, on or after at 2%. The form 26QC asks for the relevant rate. Most tenants in FY 2024-25 will have a blended rate (5% for Apr-Sep, 2% for Oct-Mar). FY 2025-26 onward: flat 2%.
How to file Form 26QC
- Go to
www.incometax.gov.in→ e-Pay Tax → New Payment → Form 26QC. - Fill tenant PAN, landlord PAN.
- Property type + address.
- Period of tenancy (from / to dates within the FY).
- Total rent paid / payable in the year.
- Date of payment / credit (typically last day of FY or vacating date).
- TDS computed at the applicable rate.
- Pay via netbanking / UPI → save challan.
- Download Form 16C within 15 days; email to landlord.
Due date for filing 26QC
Within 30 days from end of the month in which TDS is deducted. If you deducted in March 2026 (typical FY end), file by 30-April-2026. If you vacated in November 2025, deducted then, file by 30-December-2025.
NRI landlord — switch to Sec 195
If the landlord is a Non-Resident Indian, Sec 194-IB does NOT apply. Instead, Sec 195 applies at higher rates (typically 30%+ surcharge + cess on the gross rent, or as per DTAA cap if applicable). Tenant needs TAN (not just PAN), files Form 27Q quarterly.
Many urban tenants don't verify residential status of landlord. If you're renting from a landlord who lives in Singapore but owns Indian property, Sec 195 is the right path.
Common mistakes
- Not deducting because "landlord doesn't agree". Deduction is a statutory obligation, not optional. Landlord agreement is irrelevant. If landlord refuses, tenant still deducts and deposits — landlord can claim credit via Form 16C / Form 26AS.
- Deducting monthly instead of yearly. Possible but operationally heavier. Once a year (March / vacating) is the prescribed simplification under Sec 194-IB.
- Wrong rate after 1-Oct-2024. Compute blended rate for FY 2024-25 (5% on Apr-Sep portion, 2% on Oct-Mar portion).
- Forgetting Form 16C. Landlord can't claim TDS credit without 16C. Tenant must download from TRACES and email within 15 days of 26QC.
- Missing 30-day deposit window. Penalty interest 1.5% per month for late deposit + ₹200/day late filing fee under Sec 234E, capped at TDS amount.
- Treating maintenance / society charges as separate from rent. If maintenance is part of agreement, it's rent. If paid separately to society, it's not.
Tax audit tenant — Sec 194-I instead
If the tenant is an individual / HUF under tax audit (turnover > ₹1 Cr business or ₹50L profession), or any firm / LLP / company, Sec 194-I applies instead — at 2% (plant/machinery) / 10% (land/building) with a different threshold (₹2.4L per year aggregate). Sec 194-IB is specifically the "small tenant" provision for non-audit individuals.
Bottom line
Sec 194-IB is a once-a-year compliance, simple in execution but unknown to most urban tenants. If you're paying > ₹50K monthly rent, you're a TDS deductor. Compute 2% (or blended for FY 2024-25), file 26QC by 30-April for March deductions, issue 16C to landlord. The cost of compliance is one form. The cost of default is 1.5% per month interest + ₹200/day late fee, easily ₹15-25K per year for a sub-₹15K TDS amount. Don't carry the exposure into next year — do it in March.