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TDS on Rent (Section 194-IB)
If you're an individual or HUF (not under audit) paying rent above ₹50,000 /month, you must deduct 5% TDS on the total annual rent and deposit via Form 26QC. Filed by the 30th of the next month after vacating or year-end (Mar 31).
TDS at 5% on total rent. Filed via Form 26QC by 30th of month after vacating/year-end.
How Section 194-IB works
Inserted in 2017 to bring high-rent landlords into the tax net, Section 194-IB obliges individual / HUF tenants not under tax audit who pay rent above ₹50,000 per month to deduct 5% TDS on the total annual rent. Deduction happens only once a year — in the month of vacating or in March, whichever is earlier. Deposit through Form 26QCon the TIN-NSDL portal and issue Form 16C to the landlord. No TAN is required (one-time PAN-based deduction).
Worked example
A Gurgaon tenant pays ₹85,000/month rent from April 2025 to March 2026, total ₹10,20,000. In March 2026, deduct 5% = ₹51,000 TDS, deposit via Form 26QC by 30 April 2026, hand over ₹51,000 less in the March rent payment (₹34,000 net for March). Issue Form 16C to the landlord, who claims it against his/her income tax liability. If you vacate mid-tenancy (say, October 2025), the deduction happens at vacating — on 7 months × ₹85k = ₹5.95L rent, TDS ₹29,750.
When this applies (and when it doesn't)
- Salaried tenant paying > ₹50k/month — even though you're salaried, you must deduct
- Joint tenants — each tenant's individual share must exceed ₹50k for 194-IB to apply
- Business tenants under tax audit — use 194-I instead (10% TDS, monthly)
- Rent paid to NRI landlords — use 195, not 194-IB
Missing the 30-April deadline triggers ₹200/day late fee under 234E plus 1% monthly interest. The landlord can't claim the TDS unless you file 26QC correctly. Pair with the HRA calculator to ensure your HRA claim doesn't conflict, and use the TDS section finder for other rent scenarios.
FAQ
Who needs to deduct 194-IB TDS?
Individuals or HUFs not under tax audit, paying rent > ₹50,000/month. Companies and audited firms fall under section 194-I (different rules — 10% TDS, monthly). Salaried individuals paying high rent are the typical 194-IB targets.
When and how do I file the 26QC?
By the 30th of the month after vacating, OR within 30 days of FY end (Mar 31) — whichever is earlier. Filed online at TIN-NSDL with the buyer/landlord PAN. Form 16C is then issued to the landlord within 15 days.
What if I don't deduct TDS as a tenant?
You become liable to pay the TDS yourself, plus interest (1%/month) and penalty (₹100/day under section 234E, capped at the TDS amount). The IT department may also disallow your HRA exemption if PAN-rent matching fails.