TDS on Rent: Section 194I Rules for Tenants & Landlords in India
Reviewed by CA Nikhil Gupta · Last reviewed 17 June 2026
Rent TDS depends on the payer, landlord’s residency, rental asset and month of payment. From 1 April 2025, section 194-I uses a threshold of ₹50,000 for a month or part of a month. The separate section 194-IB route also uses ₹50,000 per month. For Tax Year 2026–27 these resident-rent routes appear in section 393(1), Table 2(ii) and 2(i), respectively; an annual ₹2.4 lakh shortcut is out of date.
Two Sections — Two Different Rules
TDS on rent is governed by two separate sections of the Income Tax Act, depending on who the tenant is:
| Section | Applicable To | Threshold | TDS Rate |
|---|---|---|---|
| 194I | Companies, firms/LLPs and individual/HUF payers meeting the statutory preceding-year business/professional-receipts test; do not use tax-audit status alone | ₹50,000 for a month or part of a month, from 1 April 2025 | 2% (plant/machinery/equipment) | 10% (land/building/furniture) |
| 194IB | Individual/HUF outside the specified-payer receipts test; TY 2026–27: section 393(1), Table 2(i) | ₹50,000 per month | 2% from 1 October 2024; previously 5% |
Section 194I in Detail: For Businesses
Under Section 194I, TDS must be deducted at the time of credit or payment (whichever is earlier) on rent paid for:
- Land, building, or furniture/fittings: TDS at 10%
- Plant, machinery, or equipment: TDS at 2%
Apply the ₹50,000 threshold to rent for a month or part of a month, including aggregate covered rent to the same resident payee. The older ₹2.4 lakh annual threshold belongs to periods before 1 April 2025. A short tenancy can trigger withholding even when its yearly total is below ₹6 lakh.
Section 194IB in Detail: For Salaried/Individual Tenants
If you are a salaried employee or individual (not required to get tax audit) and pay rent exceeding ₹50,000 per month to a landlord, you must:
- Deduct TDS at 2% of the rent in the last month of the financial year or the last month of tenancy (whichever is earlier)
- Deposit the TDS using Challan 26QC on the TIN-NSDL portal within 30 days from the end of the month in which TDS was deducted
- Issue Form 16C (rent TDS certificate) to your landlord within 15 days of filing the challan
Unlike 194I (which requires a TAN), 194IB deductions can be made using only your PAN — no TAN required.
Landlord's PAN: What If They Refuse to Share?
If the landlord does not provide PAN:
- Under Section 194I: TDS rate becomes 20% (instead of 10%) as per Section 206AA
- Under the resident individual/HUF rent route, failure to furnish PAN can trigger the statutory higher rate, subject to the special cap that deduction must not exceed the last month’s rent. It does not simply leave withholding at 2%.
Always insist on the landlord's PAN at the time of signing the rent agreement. In practice, most landlords cooperate.
Consequences of Not Deducting TDS on Rent
| Consequence | Details |
|---|---|
| Interest on late deduction | 1% per month from date TDS was deductible to date of actual deduction |
| Interest on late deposit | 1.5% per month from date of deduction to date of deposit |
| Disallowance of rent expense | 30% of rent expenditure disallowed under Section 40(a)(ia) for businesses that fail to deduct TDS — effectively a 30% penalty on the expense claim |
| Penalty under Section 271C | Amount equal to TDS not deducted |
How to Deposit TDS and File Returns
For businesses (194I): Deposit TDS monthly by the 7th of the following month using Challan 281 (via net banking or authorised bank). File quarterly TDS returns in Form 26Q. Issue Form 16A to the landlord within 15 days of due date of filing the quarterly return.
For individuals (194IB): One-time deduction in the last month of FY. Deposit via Challan 26QC at tin.tin.nsdl.com within 30 days of end of that month. Issue Form 16C within 15 days of Challan 26QC filing. See our TDS compliance calendar for all key deadlines across the year.
HRA Exemption Link: The Tenant's Side
As a salaried tenant, the rent you pay also determines your HRA (House Rent Allowance) exemption from income tax. Even if you're required to deduct TDS under 194IB, you can still claim HRA exemption — but you'll need to provide your landlord's PAN to your employer if rent exceeds ₹1 lakh per year. See our HRA exemption guide for the calculation formula and documentation required.
Frequently Asked Questions
Source and review trail
Use the current official instrument, portal or regulator publication before acting.
- Primary category
- Income Tax
- Official starting point
- www.incometax.gov.in
Primary sources & related provisions
Statutory provisions referenced in this guide:
Short tenancy: why the monthly threshold matters
Constructed example for Tax Year 2026–27: a company pays a resident landlord ₹1,00,000 for one month of building rent. Section 393(1), Table 2(ii), uses ₹50,000 for a month or part of a month. The threshold is crossed even though annual rent is below ₹6 lakh. TDS = 10% × ₹1,00,000 = ₹10,000; net rent paid = ₹90,000. At exactly ₹50,000 for that month the threshold is not exceeded. For a payer other than a specified person, Table 2(i) instead applies the 2% route and its last-month deduction timing. Non-resident landlords require their separate withholding rules.
Income-tax Act 2025, section 393(1), Table 2(i)/(ii), Gazette pages 398–399