Understanding TDS on Rent Exceeding ₹50,000: What Every Tenant and Landlord Must Know (As per Section 194-IB)
Are you paying a monthly rent of more than ₹50,000? Whether you’re a tenant or a landlord, it’s crucial to understand the Tax Deducted at Source (TDS) rules around rental payments—especially after recent updates in the Union Budget 2024.
Latest Update – New TDS Rate
- Earlier TDS Rate: 5% of monthly rent
- New TDS Rate (from October 1, 2024): 2% of monthly rent
For instance: If your rent is ₹60,000 per month, from October 2024 onwards, you must deduct ₹1,200 (2% of ₹60,000) as TDS before paying the balance to your landlord each month.
Key Points to Remember
- Applicability: Applies only if the monthly rent exceeds ₹50,000 for any month or part of a month.
- No TAN Required: Tenants deducting TDS under Section 194-IB do not require a Tax Deduction Account Number (TAN). Use your PAN.
- When to Deduct: Deduct TDS at the time of payment or credit (usually with the rent of the last month of tenancy/year, or when vacating).
- Payment and Reporting:
- Deposit deducted TDS using Form 26QC (within 30 days of deduction).
- Issue a TDS certificate (Form 16C) to the landlord within 15 days after depositing TDS.
