TDS on rent under Section 194-IB: a guide for landlords
Section 194-IB requires an individual or HUF tenant, who is not already covered by Section 194-I, to deduct TDS on rent paid to a resident landlord where the rent exceeds ₹50,000 for any month or part of a month. The rate is 2% of the rent for the year, reduced from 5% with effect from 1 October 2024 by the Finance Act 2024. The deduction happens once in the year, on the last month of the financial year or the last month of the tenancy, and is deposited using Form 26QC with Form 16C issued to the landlord.
Why your March rent arrived short
If a tenant paying you more than ₹50,000 a month suddenly transfers less in March, the shortfall is usually not a dispute. It is TDS, deducted under Section 194-IB of the Income-tax Act, 1961, and it has been paid to the government against your PAN.
This catches landlords out because the deduction is annual, not monthly. Eleven months of rent arrive in full and the twelfth is reduced by the tax on the whole year. The money is not lost: it sits as a credit you claim when you file your return. But if the tenant deducts and never files the paperwork, the credit does not appear, and that is the problem worth preventing.
When Section 194-IB applies
Three conditions have to hold together. The tenant is an individual or a Hindu Undivided Family. That tenant is not already covered by Section 194-I, the separate rent-TDS provision that applies to tenants carrying on business or a profession above the audit limits. And the rent exceeds ₹50,000 for a month, or for part of a month.
The ₹50,000 test is monthly, not annual. Rent of ₹55,000 a month is inside the provision even if the tenancy runs only three months. Rent of ₹45,000 a month is outside it even though the year totals more than ₹5 lakh.
The landlord also has to be a resident. Rent paid to a non-resident landlord falls under a different provision entirely, with its own rate and procedure, so do not apply 194-IB to it.
The rate changed on 1 October 2024
The Finance Act 2024 reduced the rate. Which one applies depends on when the deduction falls due, so tenancies that straddle that date are worth checking.
| Deduction falls | Rate on rent for the period |
|---|---|
| Before 1 October 2024 | 5% |
| On or after 1 October 2024 | 2% |
The ₹50,000 per month threshold was not changed, only the rate.
What the tenant actually has to do
Worth knowing even as a landlord, because you are the one who loses the credit if a step is skipped.
- Deduct once in the year, on the rent for the last month of the financial year, or for the last month of the tenancy if the property is vacated earlier, whichever comes first.
- Deposit it using Form 141, the unified challan-cum-statement that replaced Form 26QC from 1 April 2026, 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 Form 26QC due date. This is the landlord's evidence of the deduction.
- Use the landlord's PAN correctly. The challan-cum-statement is PAN-based, so unlike Section 194-I the tenant does not need a TAN to comply.
How you claim the credit
The deducted amount is tax already paid on your behalf. Once the tenant files Form 26QC, it appears against your PAN and you set it off against your own liability when you file your return, with any excess refunded.
The practical risk is a mismatch. If the tenant deducted but did not file, or filed with a wrong PAN, the credit will not show and you will be asked to pay tax on income from which tax was already taken. Ask for the Form 16C rather than assuming, and check that the deduction appears against your PAN before you file. Fixing it afterwards means getting the tenant to correct a statement they have no further incentive to touch.
Free tools you can use
Section 194-IB FAQ
What is the TDS rate on rent under Section 194-IB?
2% of the rent, with effect from 1 October 2024. It was 5% before that date; the Finance Act 2024 reduced it. The provision applies where an individual or HUF tenant, not covered by Section 194-I, pays rent exceeding ₹50,000 for a month or part of a month to a resident landlord.
Does TDS apply if my rent is ₹50,000 a month?
No. The provision applies where rent exceeds ₹50,000 for a month or part of a month, so rent of exactly ₹50,000 is outside it. At ₹50,001 it applies. The test is monthly, not annual, so a short tenancy at a high monthly rent is covered while a long one at ₹45,000 a month is not.
When does the tenant deduct the TDS?
Once in the financial year, on the rent for the last month of that year, or for the last month of the tenancy if the property is vacated during the year, whichever is earlier. That is why the deduction usually shows up as a shortfall in the March rent rather than being spread across the year.
What is Form 26QC and Form 16C?
Form 141 is the challan-cum-statement the tenant uses to deposit the deducted tax, due within 30 days from the end of the month of deduction. It replaced Form 26QC from 1 April 2026, when the Income-tax Act, 2025 came into force. Form 16C is the certificate the tenant then issues to the landlord, due within 15 days of the Form 26QC due date, and it is the landlord's proof that the deduction happened.
Does the tenant need a TAN to deduct TDS under 194-IB?
No. Form 26QC works on PAN, so an individual tenant can comply using their PAN and the landlord's PAN without obtaining a TAN. That is one of the ways 194-IB is lighter than Section 194-I.
What happens if the landlord has no PAN?
Section 206AA applies and the deduction rises to 20%. Under 194-IB that higher deduction is capped at the rent payable for the last month of the previous year or of the tenancy, so it cannot exceed one month's rent, but it is still a large amount to recover through a return.
On RentStalk
Provisions referred to
- The Income-tax Act, 1961 — Section 194-IB (TDS on rent by certain individuals or HUF)
- The Income-tax Act, 1961 — Section 194-I (TDS on rent, business and professional tenants)
- The Income-tax Act, 1961 — Section 206AA (higher deduction where PAN is not furnished)
- The Finance Act, 2024 — reduction of the Section 194-IB rate from 5% to 2% w.e.f. 1 October 2024
This is general information about Indian tax law, not tax advice. Rates, thresholds and forms change with each Finance Act, and your own position depends on facts this page cannot know. Confirm the current position on incometax.gov.in or with a qualified chartered accountant before acting on it.