TDS on Rent under Section 194-IB: The Complete Guide for Tenants and Landlords
If your monthly rent crosses ₹50,000, the tenant — an ordinary individual, not a company — is legally required to deduct tax before paying rent. Most tenants don't know this until it's too late.
Section 194-IB is one of the most quietly important rules in Indian residential renting — and one of the most widely ignored, simply because most tenants assume TDS is something only businesses deal with. It isn't. If you're an individual or HUF renting a home for more than ₹50,000 a month, this section applies directly to you.
- Who has to deduct, and exactly when the ₹50,000 threshold triggers
- How much to deduct, and how the rate recently changed
- How to file Form 26QC, step by step
Who does Section 194-IB apply to?
Section 194-IB applies to any individual or HUF tenant not required to get their accounts audited under Section 44AB, paying rent to a resident landlord that exceeds ₹50,000 for any month in the financial year. This is distinct from Section 194-I, which applies to businesses and audited individuals/HUFs under a separate annual threshold.
| Section 194-IB | Section 194-I | |
|---|---|---|
| Who deducts | Individual/HUF tenant not under tax audit | Businesses, companies, audited individuals/HUFs |
| Threshold | ₹50,000 in any month | Annual threshold — confirm the current figure each financial year |
| Rate | 2% (reduced from 5%, effective 1 Oct 2024) | 10% land/building, 2% plant/machinery |
| TAN required? | No — PAN suffices | Yes |
| Filing form | Form 26QC | Form 26Q |
When exactly does the threshold trigger?
The rule is based on any single month's rent exceeding ₹50,000 — not an annual total. A common structuring question is joint tenants: if each pays their own share below ₹50,000, 194-IB typically doesn't apply to any of them individually. But if one tenant is the sole named party and is simply reimbursed by flatmates, the entire rent is treated as paid by that one tenant, and 194-IB applies to the full amount.
How much TDS to deduct
The applicable rate is 2% of the rent, effective from 1 October 2024 — it was 5% before that date. If the landlord doesn't provide a valid PAN, the rate jumps to 20% under Section 206AA.
How to deduct, deposit, and file
- Deduct once — typically in the last month of the tenancy during the year, or in March, whichever is earlier.
- File Form 26QC — a combined challan-cum-statement filed online; only PAN is needed, no TAN.
- Deposit within 30 days from the end of the month in which the deduction was made.
- Issue Form 16C to the landlord within 15 days of the filing due date.
- 194-IB applies to ordinary individual tenants, not just businesses — the ₹50,000/month threshold is easy to cross in most metros.
- The current rate is 2% (down from 5% before October 2024); no PAN means 20%.
- No TAN is needed — just PAN and Form 26QC.
Frequently asked questions
Does 194-IB apply if I pay rent to an NRI landlord?
No — rent paid to a non-resident landlord falls under Section 195 instead, with no monthly threshold and a much higher rate. See our NRI rent TDS guide.
Do I need a TAN to deduct TDS under 194-IB?
No. Your PAN and the landlord's PAN are sufficient for Form 26QC.
Can the landlord claim a refund if excess TDS was deducted?
Yes. TDS deducted is treated as an advance tax credit and adjusted against the landlord's final tax liability when they file their return.