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The Union Budget 2024 reduced the TDS rate on rent payments under Section 194-IB from 5% to 2%, effective October 1, 2024. This has created confusion regarding the applicable rate for rent payments, especially for the year ending in March 2025- should TDS be deducted at 5% or 2%? Understanding t
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The TDS rate on rent payments under Section 194-IB has been reduced from 5% to 2%, effective from October 1, 2024.
Individuals or Hindu Undivided Families (HUFs) paying rent exceeding ₹50,000 per month are required to deduct TDS.
TDS is deducted at the time of credit of rent or payment of rent, whichever is earlier, for the last month of the financial year or the last month of tenancy if the property is vacated.
If the rent for the last month (September 2024) is paid or credited before October 1, 2024, the TDS rate of 5% applies.
If the rent for the last month (March 2025) is paid or credited in March 2025 (which is after October 1, 2024), the new TDS rate of 2% applies.
No, there is no requirement to split the TDS deduction. The applicable rate is determined solely by whether the payment or credit for the last month occurs before or after October 1, 2024.
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