TDS on Rent Under explained: this guide covers what TDS on Rent Under means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Key Highlights
- Section 393(1) [Sl. No. 2(i)] (old 194IB): Individuals/HUF paying rent above Rs 50,000/month — TDS at 2% (reduced from 5% — Budget 2024)
- Section 393(1) [Sl. No. 2(ii)] (old 194I): Companies/firms paying rent — TDS at 10% (land/building) or 2% (plant/machinery)
- Section 393(1) [Sl. No. 2(ii)] threshold: Rs 50,000 for a month or part of a month
- TDS on rent is deducted annually (Section 393(1) [Sl. No. 2(i)] for individuals) or monthly (Section 393(1) [Sl. No. 2(ii)] for businesses)
- Form 16C: TDS certificate issued by tenant to landlord under Section 393(1) [Sl. No. 2(i)]
- Form 26QC: TDS return for Section 393(1) [Sl. No. 2(i)] transactions
1. Section 393(1) [Sl. No. 2(i)]: TDS on Rent by Individuals and HUF
Applicable when an individual or HUF (who is not subject to tax audit) pays rent to a landlord for residential or commercial property:
- Threshold: Rent exceeds Rs 50,000 per month
- TDS Rate: 2% (reduced from 5% by Budget 2024, effective 1 October 2024)
- When to deduct: At the end of the financial year OR when leaving the property — whichever is earlier
- One-time annual deduction (not monthly)
- TDS return: Form 26QC filed within 30 days
- TDS certificate: Form 16C issued to landlord within 15 days of Form 26QC
2. Section 393(1) [Sl. No. 2(ii)]: TDS on Rent by Businesses
Applicable when any taxpayer (company, firm, LLP, individual subject to audit) pays rent for use of land, building, or equipment:
- Threshold: Rs 50,000 for a month or part of a month
- Rates: 10% (land, building, furniture, fittings); 2% (plant, machinery, equipment)
- When to deduct: Monthly or at the time of credit — whichever is earlier
- TDS return: Form 26Q quarterly
3. Comparison: Section 393(1) [Sl. No. 2(i)] vs Section 393(1) [Sl. No. 2(ii)]
| Feature | Section 393(1) [Sl. No. 2(i)] | Section 393(1) [Sl. No. 2(ii)] |
|---|---|---|
| Applicable to | Individual/HUF (non-audit) | All — companies, firms, audit cases |
| Threshold | Rs 50,000/month | Rs 50,000 for a month or part of a month |
| Rate (land/building) | 2% | 10% |
| Rate (machinery/plant) | N/A | 2% |
| Deduction timing | Annual (at year end or exit) | Monthly (at credit/payment) |
| TDS return | Form 26QC | Form 26Q |
| TDS certificate | Form 16C | Form 16A |
4. Practical Example: Individual Paying Rent
Illustrative only. Amit rents a house in Delhi for Rs 60,000 per month (above Rs 50,000 threshold). Full year rent = Rs 7,20,000. At year end (31 March 2027), he deducts TDS: Rs 7,20,000 x 2% = Rs 14,400. He files Form 26QC within 30 days and pays Rs 14,400 to the government. He issues Form 16C to his landlord for Rs 14,400 TDS.
5. Higher TDS for No PAN Landlord
If the landlord does not provide PAN, TDS under Section 393(1) [Sl. No. 2(i)] must be deducted at the higher of 2% or 20% — resulting in TDS of 20%, which under Section 397(2)(e) cannot exceed the rent payable for the last month of the tax year or of the tenancy. Always collect landlord PAN before making rent payments to avoid this higher rate and the associated complications.
6. Why TaxClue
TDS on rent compliance — Form 26QC filing, Form 16C issuance, and rate determination — requires precision. TaxClue assists both tenants with TDS compliance and landlords with TDS credit reconciliation. Contact us for TDS on rent advisory under ITA 2025.