Tax talk: How to deduct TDS on rent above ₹50,000
If your rent is above ₹50,000 per month, you're required to deduct 2% TDS under Section 194-IB of the Income Tax Act, even if you're just an individual, or part of a Hindu Undivided Family (HUF), who are not required to get their accounts audited under section 44AB.
Good news: This rate dropped from 5% in October 2024, so tenants now get a bit of relief.
Deduct and deposit TDS when paying rent
You'll need to deduct TDS when paying rent for March 2026 or whenever your lease ends, whichever comes first.
Deposit it within 30 days using Form 26QC (no TAN required); ensure you enter the landlord's PAN and other required details.
Afterward, give your landlord Form 16C as proof.
What if you miss the deduction?
Miss the deduction? That's a 1% monthly interest on what wasn't deducted. Delay the deposit? You'll face 1.5% interest per month for delayed deposit.
Separately, late filing of Form 26QC (the challan-cum-statement) attracts a ₹200-per-day penalty, and skipping the return can cost up to ₹100,000 in penalties.
Know your sections
Section 194-I applies to persons (including entities and individuals/HUFs liable to tax audit) who pay rent that exceeds the annual threshold;
the TDS rate under Section 194-I is generally 10% for rent of land and buildings (and related items) and 2% for rent of plant or machinery,
while Section 194-IB is designed for regular folks like salaried individuals and pensioners renting homes.
Knowing which section applies helps both tenants and landlords stay on the right side of tax rules.