TDS on Rent: Limit, Rate, Section and How to Pay (2026 Guide)
TDS on rent is tax that a tenant deducts from the rent and pays to the government on the landlord’s behalf. If you are an individual or HUF tenant and your rent is more than ₹50,000 a month, you must deduct 2% TDS, usually once a year in March or when you move out. Rent paid to an NRI landlord is taxed differently, from the first rupee. This guide explains the limit, rate, section, how to pay and the common mistakes.
- Who deducts: an individual or HUF tenant (not under tax audit) paying rent above ₹50,000 a month
- Rate: 2% of the rent (20% if the landlord does not give a PAN, capped at one month’s rent)
- When: once a year, in the last month of the financial year or of the tenancy, whichever comes first
- TAN needed? No, the tenant uses their PAN
- Section: Section 194-IB of the Income-tax Act, 1961; from 1 April 2026, Section 393 of the Income-tax Act, 2025
- NRI landlord: TDS applies on any amount, the tenant needs a TAN, and the rate is much higher
What is the TDS on rent limit?
For individual and HUF tenants, TDS applies only when the rent is more than ₹50,000 for a month or part of a month. If your rent is ₹50,000 or less, no TDS is needed.
Businesses, companies, firms and individuals whose accounts are audited follow a separate rule (Section 194-I of the old Act). They also deduct TDS when rent exceeds ₹50,000 a month, but at 10% for land and buildings (2% for plant and machinery), at the time of payment or credit, using a TAN.
Rate of TDS on rent
| Who pays the rent | Landlord | Rate | Threshold |
|---|---|---|---|
| Individual or HUF (no tax audit) | Resident | 2% | Above ₹50,000 a month |
| Individual or HUF, landlord gives no PAN | Resident | 20% (capped at one month’s rent) | Above ₹50,000 a month |
| Business, company or audited person | Resident | 10% (land and building), 2% (plant and machinery) | Above ₹50,000 a month |
| Any tenant | NRI | Rate for the NRI’s income, plus surcharge and cess (commonly about 30%+) | Any amount |
The 2% rate for individual tenants has applied since 1 October 2024; before that it was 5%.
Which section covers TDS on rent?
- Section 194-IB (Income-tax Act, 1961): individual and HUF tenants not under tax audit.
- Section 194-I: businesses, companies and audited persons.
- Section 195: payments, including rent, to non-residents.
The Income-tax Act, 2025 applies from 1 April 2026 and brings these TDS rules together under Section 393, with the same 2% rate and ₹50,000 monthly limit for individual tenants. Forms and section numbers on the income-tax portal may show the new references, so check the current form when you pay.
When do you deduct TDS on rent?
An individual tenant deducts TDS once a year, not every month:
- in March (the last month of the financial year), or
- in the last month of the tenancy, if you move out earlier.
Example: you pay ₹60,000 a month from April to March. Annual rent is ₹7,20,000. TDS at 2% is ₹14,400, deducted from March’s rent. You pay the landlord ₹45,600 in March and deposit ₹14,400 with the government.
How to pay TDS on rent online
- Log in to the income-tax e-filing portal (incometax.gov.in) with your PAN.
- Choose the e-pay tax option and the TDS on rent of property form (Form 26QC under the old rules; check the current form name under the 2026 rules).
- Enter the landlord’s PAN, address, the tenancy period, the total rent and the TDS amount.
- Pay online and keep the challan receipt.
- Deposit within 30 days from the end of the month in which you deducted the tax.
- Download the TDS certificate (Form 16C under the old rules) from the TRACES portal and give it to your landlord.
You do not need a TAN as an individual tenant under this rule.
TDS on rent paid to an NRI landlord
If your landlord is a non-resident Indian, the rules are stricter:
- TDS applies on any amount of rent, with no ₹50,000 limit.
- The tenant must get a TAN and file a quarterly TDS return (Form 27Q).
- The rate is the rate for the NRI’s income plus surcharge and cess, commonly about 30% or more. The landlord can apply for a lower-deduction certificate from the tax department.
Because the rate is high and the paperwork is heavier, tenants of NRI landlords should confirm the exact rate with a tax adviser. See our NRI repatriation guide for the landlord’s side.
What if you don’t deduct TDS on rent?
- Interest: 1% a month if you do not deduct, and 1.5% a month if you deduct but pay late.
- Late fee: ₹200 a day for late filing, up to the TDS amount.
- Penalty: the tax department can also levy a penalty for not deducting.
Penalty and fee amounts can change, so check the current rules on the income-tax portal.
Tips for tenants and landlords
- Collect the landlord’s PAN before the tenancy starts, or you may have to deduct 20%.
- Write the TDS arrangement into the rent agreement.
- If there are two landlords (for example joint owners), split the TDS by each owner’s share and enter each PAN.
- Landlords: check that the TDS appears in your Form 26AS or Annual Information Statement, and claim it when you file your return.
- HRA: tenants claiming HRA must give the landlord’s PAN to their employer if annual rent is above ₹1 lakh.
Renting out a home? Read our complete landlord guide, or browse rental listings on Housepartner.
Frequently asked questions
What is the limit for TDS on rent?
For individual and HUF tenants, TDS applies when rent is more than ₹50,000 for a month or part of a month. Below that, no TDS is required.
What is the rate of TDS on rent?
2% for individual and HUF tenants paying rent above ₹50,000 a month. Businesses and audited persons deduct 10% on land and building rent. If the landlord does not give a PAN, the rate is 20%, capped at one month’s rent for individual tenants.
Which section covers TDS on rent paid by an individual?
Section 194-IB of the Income-tax Act, 1961. From 1 April 2026, the Income-tax Act, 2025 covers it under Section 393, with the same 2% rate and ₹50,000 monthly limit.
Do I need a TAN to deduct TDS on rent?
No, not as an individual or HUF tenant paying a resident landlord; you use your PAN. You do need a TAN if your landlord is an NRI.
When should I deduct TDS on rent?
Once a year: in March, or in the last month of the tenancy if you move out earlier. Deposit it within 30 days from the end of that month.
Is TDS deducted on rent paid to an NRI landlord?
Yes, on any amount of rent. The tenant needs a TAN, files Form 27Q, and deducts at the rate applicable to the NRI’s income plus surcharge and cess, commonly about 30% or more.
What happens if I don’t deduct TDS on rent?
You may have to pay interest (1% a month for not deducting, 1.5% a month for late payment), a late fee of ₹200 a day for late filing, and possibly a penalty.
Is TDS on rent calculated on rent including maintenance?
TDS is calculated on the rent paid. If maintenance is paid separately to the society, it is usually not part of the rent; if it is included in the amount paid to the landlord, check with a tax adviser.
Tax rules, rates, forms and section numbers change, and the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Confirm the current rules on incometax.gov.in or with a qualified tax adviser before you pay. This guide is general information, not tax advice. Sources: Income Tax Department (incometax.gov.in); Income-tax Act, 1961, Sections 194-I, 194-IB and 195; Income-tax Act, 2025, Section 393.
