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TDS on Rent – Section 194IB (Applicable to Individuals/HUFs Not Covered Under Tax Audit i.e., employees)

🔍 What is Section 194IB?

Section 194IB mandates that individuals and HUFs who are not required to get their accounts audited must deduct TDS on rent payments, if the monthly rent exceeds ₹50,000.

✅ Who Must Deduct TDS Under Section 194IB?

  • Applicable To:
    Individuals or HUFs not liable for tax audit under Section 44AB.

  • Applicable When:
    Rent paid to a resident landlord exceeds ₹50,000 per month.

  • Nature of Property:
    Land or building (residential or commercial)

📊 TDS Rate Under Section 194IB
  • 2% on rent if deducting since 01.10.2024
  • 5% on rent if deducting before 01.10.2024
Activity Timeline
TDS Deduction At payment or credit of rent for last month of tenancy/year
Deposit of TDS Within 30 days from the end of the month of deduction
TDS Return (Challan) Form 26QC (online)
TDS Certificate to Landlord Form 16C, within 15 days of Form 26QC filing
TAN Requirement ❌ Not required

⚠️ Important Points

  • If landlord does not provide PAN, deduct TDS at 20% (Section 206AA)

  • TDS is deducted once annually (not monthly)

  • Refundable security deposit – Not subject to TDS
    Advance or non-refundable rent – Subject to TDS

Example : Tenancy from April 2024 – March 2025

  • Tenant: Mr. Ajay (individual, not under audit)

  • Landlord: Mr. Rakesh (resident)

  • Monthly Rent: ₹60,000

  • TDS Rate: 2% (after Oct 1, 2024)

Total Rent : ₹60,000 × 12 = ₹7,20,000
TDS Amount: ₹7,20,000 × 2% = ₹14,400
TDS Deducted On: March 2025 rent payment
Form 26QC Due Date: 30th April 2025
Form 16C Due Date: 15th May 2025

💼 TDS Deduction & Payment – Example Summary

  • Total Rent Payable to Landlord (Annual): ₹7,20,000

  • TDS @ 2% (from Oct 1, 2024): ₹14,400

  • Net Rent Payable to Landlord (after TDS): ₹7,20,000 – ₹14,400 = ₹7,05,600

✅ TDS of ₹14,400 must be deposited with the Government by the tenant against the PAN of the landlord.

📌 Once the TDS return (Form 26QC) is successfully filed, the landlord will get credit of ₹14,400 under their PAN in their Form 26AS.

⚠️ Important Compliance Note

It is the tenant’s responsibility to:

  1. Deduct the TDS when paying the last month’s rent or at the end of the tenancy.

  2. Deposit the TDS with the government within 30 days using Form 26QC.

  3. Provide Form 16C (TDS certificate) to the landlord within 15 days of filing Form 26QC.

🚫 Failure to deduct or deposit TDS will result in penalty, interest, and possible disallowance of rent expense under income tax law.

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