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Paying rent above Rs 50,000 per month? Under Section 194-IB of the Income-tax Act, you - the tenant - must deduct TDS at 2% before paying your landlord, even if you are a salaried individual with no business. You do not need a TAN; your PAN and your landlord's PAN are enough. The deduction is made o
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FAQ :
No, Section 194-IB of the Income-tax Act applies only when the monthly rent strictly exceeds £50,000. If your rent is precisely £50,000 per month, no TDS deduction is required.
If you vacate the property before the end of the financial year, you must deduct TDS in the last month of your tenancy on the total rent paid for that period. You then need to file Form 26QC within 30 days from the end of that month.
No, a Tax Deduction Account Number (TAN) is not required for deducting TDS on rent under Section 194-IB. You will use your PAN as the deductor and your landlord's PAN as the deductee when filing Form 26QC.
The TDS rate under Section 194-IB is 2% of the rent. This rate applies to deductions made from the financial year 2025-26 onwards, following a reduction from 5%.
If your landlord is an NRI, Section 194-IB does not apply. Instead, Section 195 of the Income-tax Act governs the TDS, which requires a TAN, monthly deductions, and a higher TDS rate of approximately 31.2% unless a lower rate is specified under a Double Taxation Avoidance Agreement (DTAA).
The Income Tax Department cross-verifies your HRA exemption claims against your Form 26QC filings. If you claim HRA without the corresponding TDS compliance, it can trigger a notice from the department, potentially leading to disallowance of the exemption, interest, and penalties.
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