Payment of TDS by an individual and filing 26QC

194 IB: An Individual or HUF is paying rent of more than Rs. 50,000 per month – such person would also be required to deduct TDS @ 5% under Section 194IB. 

Tenants must deduct and pay the tax to the government once per financial year i.e Tenant needs to deduct TDS on March month rent or on the last tenancy month. A challan-cum-statement, Form 26QC, should be used to make this payment. Further, the tenant must provide Form 16C, a TDS certificate, to the landlord as proof of the tax deposited. A tax deduction account number (TAN) is not necessary to make the transaction.

Section 194IB applies specifically to individuals and HUFs paying rent above Rs 50,000 per month and not subject to tax audit. So yes, this applies to you even though you are not a business.

Here is how it works:

Rate: 5% TDS on total rent paid in the financial year (or rent paid at end of tenancy if leaving before March 31).

No TAN required: You do not need a Tax Deduction Account Number to file under Section 194IB. Your PAN is sufficient.

Form 26QC: This is the challan-cum-statement you file instead of a regular TDS return. It is a one-time filing at the end of the financial year (or when tenancy ends), not monthly.

Step-by-step for 26QC:
- Go to the Income Tax portal (www.incometax.gov.in).
- Pay the TDS amount using Challan 26QC under the TDS section.
- After payment, an acknowledgment and Form 16C (TDS certificate) are generated, which you give to the landlord.

Deduct 5% of the annual rent from the last month's payment (common practice). The landlord can claim this TDS as credit against their income tax liability.

This [Section 194IB and 26QC guide](https://taxgarden.in/blog/tds-on-rent-section-194i-194ib-india-ay-2026-27) covers the entire process with the 26QC payment steps and the landlord certificate process.

Rate update: TDS under Sec 194-IB was cut from 5% to 2% for rent paid or credited on or after 1 Oct 2024 (Finance (No.2) Act 2024), so the 5% in both replies is outdated; from 1 Apr 2026 it continues under Sec 393 of the Income-tax Act 2025, deducted once a year (March or last month of tenancy) through the challan-cum-statement, with no TAN needed.

Under section 194-IB, TDS is not required to be deducted and deposited monthly merely because rent is paid monthly. The tenant deducts tax once, at the time of credit or payment of rent for the last month of the financial year or the last month of the tenancy, whichever is earlier. If rent is paid in advance, the payment trigger can bring deduction forward.

The deducted tax must be deposited, and Form 26QC filed, within 30 days from the end of the month in which TDS was deducted. Thus, your understanding of “credit or payment, whichever is earlier” needs to be read with the specific timing rule in section 194-IB: that rule fixes when deduction is due; it does not make each monthly rent payment a separate deduction and 26QC event. The amount is computed on the rent for the relevant tenancy period, subject to the statutory threshold and rate applicable for the year.

This timing should be reflected in the rent ledger and the year-end or tenancy-closure compliance review. Manual tracking across monthly payments and tenancy dates can be difficult; automation reduces repetitive work while professional judgment remains in control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. For a smoother compliance workflow, connect with us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1