TDS on Rent received on redevelopment of building

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If you've received rent as hardship compensation during building redevelopment, it's generally considered a non-taxable capital receipt. While there isn't a specific exemption section in the Income Tax Act, you must claim credit for any TDS deducted by the builder to avoid losing that amount. Report the rent as an exempt item in your ITR and claim the full TDS credit in the relevant schedule, keeping your redevelopment agreement handy.

MAKARAND DAMLE

MAKARAND DAMLE (Querist)
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22 July 2026 Builder has deducted TDS u/s 194IC from Rent paid on relocation. The building is under redevelopment
This rent comes under hardship compensation and not chargeable to tax. However there is no specific section u/s 10 to claim this rent as exempt income.
How to show this amount in ITR and claim credit for TDS ?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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23 July 2026 Taxability: Transit/relocation rent received during building redevelopment is a non-taxable capital receipt meant to compensate for hardship and alternative accommodation.

TDS Credit: You can and should claim credit for the TDS deducted under Section 194C by the builder to prevent permanent loss of tax withheld.

ITR Filing Action: Report the amount as a non-taxable capital receipt/exempt item in the appropriate schedule, claim the full TDS credit in the TDS schedule, and retain your redevelopment agreement ready to respond to any automated CPC mismatch notices.

MAKARAND DAMLE

MAKARAND DAMLE (Querist)
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23 July 2026 There is no section for this particular exempt income. In which schedule to show ?

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