If you are an individual or HUF paying house rent of more than ₹50,000 a month, you must deduct TDS at 2% under Section 194-IB (rate reduced from 5% w.e.f 1 Oct 2024). No TAN is needed — you file Form 26QC using your PAN and issue Form 16C to the landlord. Deduction is made only once a year — in the last month of tenancy or the last month of the financial year. Companies, firms and audited individuals instead deduct under Section 194-I at 10% (land/building) once annual rent crosses ₹6,00,000.
TDS on House Rent — Rates & Thresholds
Which section applies depends on who the tenant is, not the landlord. See the full TDS rate chart 2025-26 for every section.
| Tenant / situation | Section | TDS Rate | Threshold |
|---|---|---|---|
| Individual / HUF (not under tax audit) | 194-IB | 2% | Rent > ₹50,000/month |
| Company / firm / LLP / audited ind. — land or building | 194-I | 10% | Rent > ₹6,00,000/year |
| Company / firm — plant, machinery, equipment | 194-I | 2% | Rent > ₹6,00,000/year |
| Landlord has not furnished PAN (s.206AA) | 206AA | 20% | — |
The 194-I annual threshold was raised from ₹2,40,000 to ₹6,00,000 w.e.f 1 April 2025 (Budget 2025). Section 194-IB rate was cut from 5% to 2% w.e.f 1 October 2024.
Under Section 194-IB the total TDS for the year is capped so it cannot exceed the rent of the last month. Also, if the landlord has no PAN, the 20% rate under 206AA still applies — but it is limited to the last month's rent. Enter the PAN carefully in Form 26QC; a wrong PAN triggers the 20% rate.
Section 194-IB vs Section 194-I
Section 194-IB is the simple route for ordinary individual and HUF tenants — no TAN, one filing a year. Section 194-I applies to businesses (and individuals/HUF whose books were audited under Section 44AB in the preceding year).
| Parameter | Section 194-IB (individual / HUF) | Section 194-I (company / firm / audited) |
|---|---|---|
| Who deducts | Individual / HUF not under audit | Company, firm, LLP, audited ind./HUF |
| Threshold | Rent > ₹50,000 per month | Rent > ₹6,00,000 per year |
| TDS rate | 2% | 10% building · 2% plant |
| TAN needed | No — use PAN | Yes |
| Challan / return | Form 26QC (challan-cum-statement) | Challan-281 + quarterly Form 26Q |
| TDS certificate | Form 16C | Form 16A (from TRACES) |
| When to deduct | Once — last month of tenancy / FY | At each credit or payment |
| Deposit due | Within 30 days of month-end | By 7th of next month |
A single individual tenant renting a home never needs TAN — Section 194-IB was designed to keep it that way.
The ₹50,000 test is applied per tenant, per landlord. If two flatmates each pay ₹30,000 to the same landlord, neither individually crosses ₹50,000, so no 194-IB TDS arises. But if one tenant pays the full ₹60,000 and recovers a share from the other, that tenant must deduct.
Renting a home or office and unsure which section applies? Get your TDS position checked.
Talk to a TDS Expert →How to Deduct & Pay TDS on House Rent
Under Section 194-IB the whole year's TDS is deducted in one shot from the last month's rent (or the month you vacate). You then pay it and file Form 26QC together on the income-tax portal — no separate return.
2% 194-IB — ₹60,000/month for 12 months
10% 194-I — company pays ₹80,000/month
- Individuals: no TAN — use your PAN
- Deduct 2% from the last month's rent (194-IB)
- Pay + file Form 26QC within 30 days of month-end
- Download Form 16C from TRACES
- Issue Form 16C to the landlord within 15 days
- Companies: obtain TAN, deposit by the 7th, file Form 26Q
Section 206AB — the higher-rate deduction for landlords who had not filed their returns — was omitted with effect from 1 April 2025 by the Finance Act 2025. You no longer need to run a return-filing check on your landlord. Only the missing-PAN rate of 20% under Section 206AA survives (capped at the last month's rent under 194-IB).
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Get TDS Return Filing →The Landlord Still Pays Tax on the Rent
TDS is only an advance on the landlord's tax. The landlord reports the rent under Income from House Property, takes the 30% standard deduction and any home-loan interest under Section 24(b), then claims the tenant's TDS as credit in the income-tax return. If TDS exceeds the tax due, the balance is refunded.
- Rent taxed under Income from House Property (or Other Sources for sub-letting)
- 30% standard deduction on Net Annual Value
- Section 24(b) home-loan interest — no cap for a let-out property
- TDS credit visible in Form 26AS / AIS before filing
What happens if you don't deduct?
| Default | Consequence | Provision |
|---|---|---|
| Failure / late deduction | Interest 1% per month | Section 201(1A) |
| Late deposit after deduction | Interest 1.5% per month | Section 201(1A) |
| Late Form 26QC / 26Q | ₹200 per day fee | Section 234E |
| Not deducting at all | Penalty up to 100% of TDS | Section 271C |
File Form 26QC even for a single annual payment — it is both the challan and the return.
The Income-tax Act, 2025 (from AY 2026-27) renumbers these provisions but keeps the substance — the 2% rate, the ₹50,000/month trigger and the no-TAN Form 26QC route are unchanged. For FY 2025-26 the familiar "194-IB" and "194-I" references remain valid and are what most taxpayers use.
TDS on House Rent — Frequently Asked Questions
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