TDS on Rent — Section 194I Rules, Rate & How to Deduct 2025

Paying rent over ₹20,000/month? Your company is probably deducting TDS on it — or should be. Here's everything about TDS on rent under Section 194I and 194IB.

Section 194I — Who Must Deduct?

Any person (other than individual/HUF not subject to tax audit) paying rent exceeding ₹2,40,000 per year must deduct TDS at source.

This typically applies to:

• Companies paying office/commercial rent
• Firms, LLPs, government bodies
• Individuals/HUFs whose accounts are subject to tax audit (turnover >₹1 crore)

Section 194IB — For Individual Tenants

If you're an individual or HUF (not in business) paying rent above ₹50,000 per month, Section 194IB applies:

• TDS rate: 5%
• Deduct once a year (at end of year or when vacating)
• No TAN required — use PAN to deposit via Form 26QC
• Give landlord Form 16C (not 16A)

TDS Rates Under Section 194I

How to Deduct and Deposit TDS on Rent

1. Get landlord's PAN — TDS deduction requires landlord PAN
2. Deduct TDS at 10% from monthly rent payment
3. Deposit TDS by 7th of next month via Challan ITNS 281 on income tax portal
4. File Form 26Q quarterly (TDS return)
5. Issue Form 16A to landlord within 15 days of quarterly return filing

What If Landlord Has No PAN?

If landlord doesn't provide PAN — TDS rate becomes 20% instead of 10%. Always collect landlord's PAN before making any rent payment.

HRA + TDS — Important for Employees

If you're claiming HRA exemption and your annual rent exceeds ₹1 lakh — you must provide landlord's PAN to your employer. This is separate from the 194IB TDS obligation on individual tenants paying >₹50,000/month.

What If TDS Not Deducted?

• Tenant treated as "assessee in default"
• Interest: 1% per month for non-deduction; 1.5% per month for non-deposit
• Penalty equal to TDS amount
• Disallowance of 30% of rent as business expense in tenant's ITR