TDS on rent at a glance (2026-27)
TDS applies only when the rent exceeds ₹50,000 for a month or part of a month, and is then worked out on the whole rent, not just the part above ₹50,000.
| Tenant (payer) | Rented | Rate | Deducted | Old section |
|---|---|---|---|---|
| Business or other payer | Land, building, furniture, fittings | 10% | Every month | 194-I(b) |
| Business or other payer | Plant, machinery, equipment | 2% | Every month | 194-I(a) |
| Individual / HUF not liable to tax audit | Land or building | 2% | Once — last month of the year or tenancy | 194-IB |
Landlord without a valid PAN: 20% instead (for an individual or HUF tenant, capped at the rent for the last month).
What changed: sections 194-I and 194-IB are now section 393
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. TDS on rent now sits in section 393(1), in one table: Sl. No. 2(i) for individuals and HUFs not liable to tax audit (what was section 194-IB) and Sl. No. 2(ii) for everyone else (what was section 194-I). The financial year is now called the tax year.
The numbers did not change in the move. They had already changed under the old Act:
- From 1 April 2025 (Finance Act 2025), the section 194-I threshold became ₹50,000 for a month or part of a month. Before that it was ₹2,40,000 for the whole financial year.
- From 1 October 2024 (Finance (No. 2) Act 2024), the section 194-IB rate for individual and HUF tenants fell from 5% to 2%.
So rent paid in FY 2025-26 and in tax year 2026-27 uses the same thresholds and rates; only the section numbers and form names differ.
Worked examples
A company renting a shop
Rent ₹80,000 a month plus 18% GST shown separately. The rent exceeds ₹50,000, so the company deducts 10% of ₹80,000 — ₹8,000 every month — and pays the landlord ₹80,000 + ₹14,400 GST − ₹8,000 = ₹86,400.
A salaried tenant renting a flat
Rent ₹60,000 a month for the full year. Nothing is deducted from April to February; from the March rent the tenant deducts 2% of ₹7,20,000 — ₹14,400 once — and deposits it against the landlord’s PAN.
Points that trip landlords up
- GST is not part of the rent for TDS
- Where the invoice shows GST separately, TDS is worked out on the rent alone (CBDT Circular 23/2017, issued under the 1961 Act). Show GST as its own line.
- A refundable security deposit is not rent
- No TDS on a deposit that is genuinely refundable. Advance rent, or a deposit adjusted against rent, is rent.
- Co-owned property
- Where each co-owner’s share is defined and paid separately, tribunals have applied the ₹50,000 test to each owner’s share rather than the total rent. Whether that holds for your letting is a question for your CA — Property360 records each owner’s share so the figures are there either way.
- Non-resident landlord
- A different provision applies, with no ₹50,000 threshold and a much higher rate subject to the tax treaty. This calculator does not cover it.
- Lower or nil deduction
- A landlord whose tax liability is lower can apply for a certificate for lower or nil deduction; the tenant then deducts at the certified rate.
- Paperwork
- A business tenant deposits monthly and files quarterly TDS statements, then issues the landlord a TDS certificate. An individual tenant uses the single challan-cum-statement (Form 26QC under the old Act) and issues a certificate (formerly Form 16C). Check the current form names on the Income Tax e-filing portal.
How Property360 handles TDS on rent
Set the TDS rate on the lease once. Every monthly invoice then shows the rent, the GST and the TDS the tenant deducts, and the ledger keeps owed, deducted and received as three separate figures — per co-owner where the property is shared. Your CA sees the same numbers.
- Guide: TDS on rent in Property360
- Bank and cash rent, TDS and GST
- GST on commercial rent
- GST & TDS rent invoicing
Sources and scope
Rules as checked on 16 October 2026: Income-tax Act, 2025, section 393(1) (Table, Sl. No. 2), in force from 1 April 2026; Income-tax Act, 1961, sections 194-I and 194-IB as amended by the Finance (No. 2) Act, 2024 and the Finance Act, 2025. For rent paid to a resident landlord. This page is general information, not tax advice — rates and procedures change, and your chartered accountant is the authority on your particular case.