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.
TDS on rent is governed by section 393(1), Table: Sl. No. 2, of ITA 2025 (section 194I of the 1961 Act and section 194IB of the 1961 Act). Understanding which section applies to you depends on whether you are a business entity or an individual paying rent. Both sections have different rates, thresholds, and compliance procedures.
Table: Sl. No. 2(ii) (section 194I of the 1961 Act): TDS by Businesses and Non-Individuals
Who must deduct?
Any person (other than individual/HUF not subject to tax audit) paying rent exceeding Rs. 50,000 for a month or part of a month to a resident must deduct TDS under section 393(1), Table: Sl. No. 2(ii) (old 194I).
Rates
| Nature of Rent | TDS Rate |
|---|---|
| Land, building, furniture/fittings | 10% |
| Plant and machinery, equipment | 2% |
Key Points
- TDS is on total annual rent, deducted at time of credit or payment (whichever earlier)
- If the landlord has a lower deduction certificate, deduct at certificated rate
- TDS return: Form 26Q quarterly
- Certificate: Form 16A
Table: Sl. No. 2(i) (section 194IB of the 1961 Act): TDS by Individuals/HUF (Non-Tax Audit)
Individuals and HUFs not under tax audit must deduct TDS if monthly rent to a resident individual exceeds Rs. 50,000.
Rate and Filing
- TDS Rate: 2% on rent for the last month of the tax year or of the tenancy (not monthly)
- Must be deducted once at end of Tax Year or when tenancy ends
- Deposited via Form 26QC (challan-cum-statement) — no quarterly return required
- Certificate issued: Form 16C
- PAN of landlord mandatory; if not available, TDS at 20%
Comparison: Table Sl. No. 2(ii) (old 194I) vs Sl. No. 2(i) (old 194IB)
| Feature | Table: Sl. No. 2(ii) (old 194I) | Table: Sl. No. 2(i) (old 194IB) |
|---|---|---|
| Applicable to | Companies, firms, LLPs, tax-audited entities | Individuals/HUF not under tax audit |
| Threshold | Rs. 50,000 for a month or part of a month | Rs. 50,000/month |
| Rate (property) | 10% | 2% |
| When to deduct | Monthly at credit/payment | Last month / vacating |
| Filing | Form 26Q (quarterly) | Form 26QC (once) |
| Certificate | Form 16A | Form 16C |
Consequences of Non-Compliance
- Interest: 1% per month (non-deduction) or 1.5% per month (non-deposit)
- Penalty equal to TDS amount not deducted/deposited
- For the Sl. No. 2(i) entry (old 194IB): late filing fee Rs. 200/day + penalty up to Rs. 1 lakh
GST and TDS on Rent
GST (18%) applies on commercial property rent above Rs. 20 lakh (aggregate supplies). TDS under ITA 2025 is computed on the base rent amount excluding GST — GST component should not be included in TDS computation.
Need Expert Help?
TaxClue's team of CAs and legal experts can assist with filing, compliance and advisory. Contact us today or explore our services.