Section numbers on this page refer to the Income-tax Act, 1961. The Income-tax Act, 2025 applies from 1 April 2026 and renumbers these provisions. Rates are pre-filled for convenience and can be edited — always confirm the current rate and threshold with your CA before deducting or filing.
How TDS on rent works
When a tenant pays rent above a set limit, they must deduct tax at source (TDS) and deposit it with the government. The landlord receives the rent minus TDS, and claims credit for the TDS in their own tax return.
Section 194-I — businesses, companies and firms
- Who deducts: any person paying rent, except individuals and HUFs who are not liable to a tax audit.
- Rate: 10% for land, building or furniture; 2% for plant, machinery or equipment.
- Threshold: rent above ₹50,000 for a month or part of a month (from 1 April 2025; earlier ₹2,40,000 per year).
- Deposit: by the 7th of the following month (30 April for March), then file the quarterly Form 26Q and issue Form 16A to the landlord.
Section 194-IB — individuals and HUFs not under audit
- Who deducts: individuals and HUFs not liable to a tax audit, paying rent above ₹50,000 per month.
- Rate: 2% (reduced from 5% with effect from 1 October 2024).
- When: once, from the rent for the last month of the financial year, or the last month of the tenancy if it ends earlier.
- Deposit: within 30 days from the end of the month of deduction, using challan-cum-statement Form 26QC. No TAN is needed. Issue Form 16C to the landlord.
If the landlord has no PAN
TDS is deducted at 20%. Under Section 194-IB, the TDS cannot exceed the rent for the last month of the year or tenancy.
TDS and GST
If GST is charged separately on the rent invoice, TDS is calculated on the rent excluding GST (CBDT Circular No. 23/2017). Use our GST on rent calculator to see the full invoice and net receivable.
Frequently asked questions
What is the TDS rate on rent under Section 194-I?
10% on rent for land, building or furniture, and 2% on rent for plant, machinery or equipment. If the landlord does not provide a PAN, TDS is deducted at 20%.
What is the threshold for TDS on rent?
From 1 April 2025, TDS under Section 194-I applies when rent exceeds ₹50,000 for a month or part of a month. Earlier the limit was ₹2,40,000 in a financial year. Section 194-IB also applies when rent exceeds ₹50,000 per month.
Is TDS on rent deducted on the amount including GST?
No. Where GST is shown separately on the invoice, TDS is deducted on the rent amount excluding GST, as clarified by CBDT Circular No. 23/2017.
Who deducts TDS under Section 194-IB?
Individuals and HUFs who are not liable to a tax audit and pay rent above ₹50,000 per month. They deduct 2% once, from the rent for the last month of the financial year or tenancy, and deposit it using Form 26QC. No TAN is needed.
Stop calculating TDS by hand
LeaseHub360 calculates 194-I TDS on every rent invoice and tracks what’s been deducted per landlord.