TDS ON RENT BY TENANT

• Journal Entry: Debit Bank (Net received) and TDS Receivable (Tax component); Credit Rental Income (Gross amount).

• Verification: Check Form 26AS / AIS on the Income Tax Portal or request Form 16A/16C from the tenant.

• Shortfalls: Keep the balance active in the tenant's ledger if it's a dispute, or debit the relevant expense head if it was an authorized spend on your behalf.

TDS on rent has two different sections depending on who the tenant is.

SECTION 194-I (tenant is a company, firm, LLP, or individual/HUF whose accounts are audited): TDS rate is 10% on annual rent. Deducted monthly or at the time of credit, whichever is earlier. No minimum threshold as such, but practically applies when annual rent exceeds Rs 2.4 lakh.

SECTION 194-IB (tenant is an individual or HUF whose accounts are NOT audited): TDS rate is 5% but only if monthly rent exceeds Rs 50,000. Deducted only in March or at the end of tenancy, not monthly.

ACCOUNTING ENTRIES FOR LANDLORD:

When rent is receivable (accrual basis):
Rent Receivable Dr [full rent amount]
  To Rental Income Cr [full rent amount]

When rent is received (net of TDS):
Bank Dr [rent amount minus TDS]
TDS Receivable (Asset) Dr [TDS amount]
  To Rent Receivable Cr [full rent amount]

At year end (Form 16A/26AS reconciliation):
TDS Receivable Dr [any difference if not yet reflected]
  To Rental Income Cr [or adjust the receivable]

HOW TO VERIFY WHETHER TENANT ACTUALLY DEPOSITED TDS:
1. Download Form 26AS from incometax.gov.in (login with PAN)
2. Go to Part A (TDS on other than salary) or Part A1
3. Check the deductor name, TAN, amount deducted, and date of deposit
4. If the tenant deducted TDS but did not deposit it with the government, it will NOT appear in your 26AS. In that case, you should still claim the TDS in your ITR citing the Form 16A issued by the tenant, but you may face matching issues at CPC level.

For the full TDS on rent rules including thresholds, rates, and landlord compliance, see this [TDS on rent Section 194-I and 194-IB guide AY 2026-27](https://taxgarden.in/blog/tds-on-rent-section-194i-194ib-india-ay-2026-27).