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 Sections 194I and 194IB of ITA 2025. 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.
Section 194I: TDS by Businesses and Non-Individuals
Who must deduct?
Any person (other than individual/HUF not subject to tax audit) paying rent exceeding Rs. 2,40,000 per year to a resident must deduct TDS under 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
Section 194IB: 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: 5% on last month's rent OR when vacating (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: 194I vs 194IB
| Feature | 194I | 194IB |
|---|---|---|
| Applicable to | Companies, firms, LLPs, tax-audited entities | Individuals/HUF not under tax audit |
| Threshold | Rs. 2,40,000/year | Rs. 50,000/month |
| Rate (property) | 10% | 5% |
| 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 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.
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