Paying rent over ₹50,000 a month? You must deduct TDS

Who this applies to

Section 194-IB puts the duty on the tenant, not the landlord. It covers any individual or family paying rent of more than ₹50,000 for a month, as long as you are not already running a business that needs a tax audit. Salaried employees are squarely covered, and most people who hear about this rule hear about it the hard way, through a notice. From 1 April 2026 the same rule is in Section 393 of the new Income-tax Act 2025.

The rent must be paid to a resident. Rent paid to an NRI landlord falls under a different section, covered below.

How much, and when

The rate is 2% of the total rent for the year (it was 5% until 30 September 2024). You deduct it once, from the rent for March, or from the last month's rent if you vacate earlier.

Example: rent is ₹60,000 a month, ₹7,20,000 for the year. TDS is 2%, ₹14,400. In March you pay your landlord ₹45,600 and deposit ₹14,400 with the government.

The paperwork, in three steps

1. Deposit the TDS through Form 26QC on the income tax e-filing portal (under e-Pay Tax) within 30 days of the end of the month you deducted it. For a March deduction, that is 30 April. The form is a challan and a return in one. You need your PAN and your landlord's PAN, not a TAN.
2. Download Form 16C from TRACES and give it to your landlord within 15 days of that date, so by 15 May.
3. Your landlord sees the amount in their Form 26AS and claims it in their own return.

If your landlord will not give a PAN, the rate becomes 20%, but the deduction is capped at one month's rent.

If your landlord is an NRI

Section 194-IB does not apply. Rent paid to a non-resident comes under Section 195, which means TDS on every month's rent, whatever the amount, at 30% plus surcharge and cess, unless the landlord obtains a lower deduction certificate. You need a TAN and must file a quarterly return in Form 27Q. Our NRI tax page covers how the landlord side of this works.

What happens if you skip it

Interest runs at 1% a month for not deducting and 1.5% a month for deducting but not depositing. A late Form 26QC costs ₹200 a day, up to the TDS amount. The department also matches HRA claims above ₹50,000 a month against Form 26QC filings, so a tenant who claims HRA on ₹60,000 rent and has filed no 26QC is easy to spot. None of this is dramatic if you fix it: file the 26QC, pay the interest, and the matter closes.

Common questions

What we do

We file Form 26QC or Form 27Q for tenants, issue Form 16C, and set a yearly reminder so it is never missed. For landlords, we make sure the credit shows in 26AS before the return is filed.

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