TDS on Rent —
Rate, Rs 6 Lakh Limit & Who Deducts
The TDS rate on rent for businesses (Section 194I) and individuals (Section 194IB), the new Rs 6 lakh annual threshold, the 20% no-PAN rate, and exactly how to deduct, deposit and file it.
TDS on rent is deducted at 10% on rent of land, building or furniture and 2% on plant & machinery by businesses and audited entities under Section 194I — but only once total rent to one landlord crosses Rs 6,00,000 a year (raised from Rs 2.4 lakh by Budget 2025, w.e.f. 1 April 2025). Individuals and HUFs not under tax audit deduct 2% under Section 194IB when monthly rent exceeds Rs 50,000. If the landlord gives no PAN, deduct at 20%.
Budget 2025 raised the Section 194I annual threshold from Rs 2,40,000 to Rs 6,00,000 (effectively Rs 50,000/month) with effect from 1 April 2025. Separately, the Section 194IB rate for individuals/HUF was cut from 5% to 2% from 1 October 2024. The Income-tax Act, 2025 consolidates these rent-TDS provisions (AY 2026-27 onwards) but keeps the same rates and limits.
TDS on Rent — Rate & Threshold Table
Who deducts, at what rate, and the threshold that triggers TDS. Rent for quarterly TDS return purposes is the amount excluding GST when GST is shown separately.
| Payment / Deductor | Section | Threshold | TDS Rate | TAN? |
|---|---|---|---|---|
| Rent of land, building or furniture — by business / audited entity | 194I | Rs 6,00,000 / yr | 10% | Yes |
| Rent of plant & machinery — by business / audited entity | 194I | Rs 6,00,000 / yr | 2% | Yes |
| Rent paid by individual / HUF (not under tax audit) | 194IB | Rs 50,000 / month | 2% | No · use PAN |
| Landlord does not furnish PAN | 194I / 194IB | As above | 20% | — |
Section 194I threshold raised to Rs 6,00,000/yr w.e.f. 1 Apr 2025 (Budget 2025); 194IB rate reduced to 2% w.e.f. 1 Oct 2024. Deduct on rent excluding GST if GST is shown separately.
Section 194I vs Section 194IB
The section depends on who is paying the rent, not the property. A business or a person under tax audit uses 194I; an ordinary individual or HUF uses the simpler 194IB.
Section 194I — businesses
- Deductor: company, firm, or individual/HUF under tax audit
- Rate: 10% building/land/furniture, 2% plant & machinery
- Threshold: Rs 6,00,000 rent per year (per landlord)
- TAN mandatory; deduct at credit or payment, whichever earlier
- File quarterly TDS return (Form 26Q)
Section 194IB — individuals
- Deductor: individual / HUF NOT under tax audit
- Rate: 2% (reduced from 5% since 1 Oct 2024)
- Threshold: rent over Rs 50,000 per month
- No TAN needed — deduct using PAN
- Deduct once a year (or on vacating) via Form 26QC
Under 194IB, TDS is deducted only once a year — in the last month of the financial year or the month you vacate — not every month. It is charged on the full annual rent (at 2%), capped so it does not exceed the last month's rent. Do not deduct monthly, and do not apply for a TAN — your PAN is enough.
Business paying rent above Rs 6 lakh? Get your TDS and Form 26Q handled.
Talk to a TDS Expert →How to Deduct & Deposit TDS on Rent
- Landlord's PAN collected (else 20%)
- TAN obtained (194I deductors)
- Rent split from GST on the invoice
- TDS deducted at correct rate (10% / 2%)
- Challan 281 / 26QC paid on time
- Quarterly Form 26Q filed (194I)
- Form 26QC filed within 30 days (194IB)
- Form 16A / 16C issued to landlord
- TDS reflects in landlord's 26AS / AIS
Fail to deduct and interest runs at 1% per month; deduct but do not deposit and it is 1.5% per month. For businesses, 30% of the rent expense can be disallowed under Section 40(a)(ia) until the TDS is paid. Late filing of the TDS return also attracts a Rs 200/day fee under Section 234E.
Want us to deduct, deposit and file your rent TDS accurately?
Get TDS Filing Help →Forms, Due Dates & Certificates
| Deductor | Deposit due | Return / statement | Certificate |
|---|---|---|---|
| Business (194I) | 7th of next month | Form 26Q — quarterly | Form 16A — within 15 days of return due date |
| Individual / HUF (194IB) | Within 30 days of month-end | Form 26QC — challan-cum-statement | Form 16C — within 15 days of Form 26QC |
| No PAN (any) | Same as above | Same as above | Deduct at 20% |
194IB deduction is made in March (or the month of vacating) and Form 26QC is due within 30 days of that month-end.
You must deduct TDS on rent if
- You are a business/audited entity paying > Rs 6,00,000 rent/year to a landlord
- You are an individual/HUF paying > Rs 50,000 rent per month
- The payment is for use of land, building, furniture, plant or machinery
No TDS needed if
- Total annual rent is Rs 6,00,000 or below (194I)
- Monthly rent is Rs 50,000 or below (194IB)
- A lower/nil deduction certificate (Form 13) is furnished by the landlord
TDS deducted on rent is credited against the landlord's tax and appears in their Form 26AS / AIS, adjusting their final income-tax return liability. See the full TDS return filing guide for return timelines.
TDS on Rent — Frequently Asked Questions
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