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Updated for FY 2026-27
TDS on Rent Chart FY 2026-27 – Rates, Limits, Sections and Complete Guide
A complete, ready-reference chart of TDS on rent for FY 2026-27 covering Section 194I and Section 194IB — applicable rates, threshold limits, who must deduct, due dates, forms, and penalties for non-compliance.
10% / 2% TDS rate (Sec 194I)
2% TDS rate (Sec 194IB)
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TDS on Rent — Quick Facts
- Sec 194I Threshold₹50,000/month
- Sec 194I Rate10% / 2%
- Sec 194IB Threshold>₹50,000/month
- Sec 194IB Rate2%
- No PAN Rate20%
- Non-Resident LandlordSection 195 applies
What Is TDS on Rent?
TDS (Tax Deducted at Source) on rent means the tenant deducts a percentage of the rent payable to the landlord and deposits it directly with the Income Tax Department, before paying the balance rent. It ensures the government collects tax on rental income upfront and helps track high-value rent transactions.
Two separate provisions govern TDS on rent in India: Section 194I, which applies to businesses, companies, and individuals/HUFs liable to tax audit, and Section 194IB, which applies to individuals and HUFs not liable to tax audit who pay high monthly rent for residential or commercial property.
TDS on Rent Chart FY 2026-27
Note: The rates and thresholds below apply for FY 2026-27 and remain unchanged from FY 2025-26, per the enhanced threshold retained in Budget 2026.
| Section | Applicable To | Nature of Payment | Threshold Limit | TDS Rate |
|---|---|---|---|---|
| 194I | Companies, firms, businesses under tax audit | Rent of land, building, furniture, fittings | ₹50,000/month (₹6,00,000/year) | 10% |
| 194I | Companies, firms, businesses under tax audit | Rent of plant & machinery / equipment | ₹50,000/month (₹6,00,000/year) | 2% |
| 194IB | Individuals/HUF not liable to tax audit | Rent of land or building (residential/commercial) | >₹50,000/month | 2% |
| 195 | Any tenant, resident or non-resident landlord | Rent paid to non-resident landlord | No threshold | Rates in force (as per DTAA/slab) |
| 206AA | Any payer, if landlord's PAN not furnished | Any rent payment above threshold | Same as above thresholds | 20% |
Section 194I — TDS on Rent for Businesses
Section 194I applies to any person, other than an individual or HUF, and to individuals or HUFs whose books of account were required to be audited in the preceding financial year, paying rent to a resident landlord.
Key Points
- Threshold: rent exceeding ₹50,000 per month (₹6,00,000 per year) to a single landlord
- 10% TDS on rent for land, building, furniture, and fittings
- 2% TDS on rent for plant, machinery, and equipment
- Once the threshold is crossed, TDS applies on the entire rent amount, not just the excess
Compliance Requirements
- Deductor (tenant) must have a TAN
- TDS deposited by the 7th of the following month (March TDS by 30 April)
- Quarterly TDS return in Form 26Q
- TDS certificate in Form 16A issued quarterly to the landlord
Section 194IB — TDS on Rent for Individuals & HUFs
Section 194IB covers individuals and HUFs who are not liable to tax audit but pay monthly rent exceeding ₹50,000 for a residential or commercial property — a common situation for salaried tenants renting a house in a metro city.
Key Points
- TDS rate: 2% of the rent paid (reduced from 5% for Payments made on or after 1 October 2024)
- No TAN required — the entire process runs on the tenant's and landlord's PAN
- Applies whether the property is used for residence or business, as long as the payer is not liable to tax audit
Compliance Requirements
- Only one TDS deduction per year — in the last month of tenancy or the last month of the financial year, whichever is earlier
- Single filing via Form 26QC (challan-cum-statement) within 30 days from the end of the month of deduction
- TDS certificate in Form 16C to be issued to the landlord within 15 days of filing Form 26QC
TDS on Rent Paid to a Non-Resident Landlord
When rent is paid to a non-resident landlord, Sections 194I and 194IB do not apply. Instead, TDS is governed by Section 195, deducted at the rates in force, which may include applicable surcharge and cess, and can be reduced under a Double Taxation Avoidance Agreement (DTAA) or a lower/nil deduction certificate obtained by the landlord under Section 197. The tenant must obtain a TAN and file quarterly returns in Form 27Q for such payments.
How to Deduct and Deposit TDS on Rent — Step by Step
1
Identify the Applicable Section
Determine whether Section 194I (business/tax-audit cases) or Section 194IB (individuals/HUF) applies based on tenant status and monthly rent.
2
Check the Threshold
Confirm the rent exceeds ₹50,000 per month before any TDS obligation arises under either section.
3
Collect the Landlord's PAN
Obtain the landlord's PAN to apply the correct rate; without PAN, TDS rises to 20%.
4
Deduct TDS at the Applicable Rate
Deduct 10% or 2% under Section 194I, or 2% under Section 194IB, from the rent payable.
5
Deposit TDS with the Government
Deposit TDS monthly (194I) using Form 26Q reporting, or as a single annual deposit (194IB) using Form 26QC, within the prescribed due dates.
6
Issue the TDS Certificate
Provide Form 16A (194I, quarterly) or Form 16C (194IB, after Form 26QC filing) to the landlord as proof of TDS deducted and deposited.
Forms Used for TDS on Rent
| Form | Purpose | Applicable Section |
|---|---|---|
| Form 26Q | Quarterly TDS return for resident payments (other than salary) | 194I |
| Form 26QC | Challan-cum-statement for TDS on rent by individuals/HUF | 194IB |
| Form 27Q | Quarterly TDS return for payments to non-residents | 195 |
| Form 16A | TDS certificate issued quarterly to the landlord | 194I |
| Form 16C | TDS certificate issued after Form 26QC filing | 194IB |
Interest and Penalty for Non-Compliance
- Late deduction: Interest at 1% per month from the date TDS was deductible to the date it is actually deducted
- Late deposit: Interest at 1.5% per month from the date of deduction to the date of actual deposit
- Late filing of return/statement: Late fee of ₹200 per day under Section 234E, subject to a cap
- Non-deduction or non-deposit: Penalty under Section 271C, up to the amount of tax not deducted or deposited
Frequently Asked Questions
What is the TDS rate on rent for FY 2026-27?
Under Section 194I, TDS is 10% on rent for land, building, furniture, and fittings, and 2% on rent for plant and machinery. Under Section 194IB, TDS is 2% for individuals and HUFs paying monthly rent above ₹50,000.
What is the threshold limit for TDS on rent?
Under Section 194I, TDS applies once rent exceeds ₹50,000 per month (₹6,00,000 per year) to a single landlord. Under Section 194IB, TDS applies when monthly rent exceeds ₹50,000, regardless of the annual total.
Who is required to deduct TDS under Section 194IB?
Individuals and HUFs who are not liable to tax audit and who pay rent exceeding ₹50,000 per month for residential or commercial property must deduct TDS under Section 194IB.
What happens if the landlord does not provide a PAN?
If the landlord does not furnish their PAN, the TDS rate increases to 20% under Section 206AA, regardless of the rate that would otherwise apply.
How many times a year is TDS deducted under Section 194IB?
Only once — in the last month of the tenancy or the last month of the financial year, whichever is earlier — unlike Section 194I, which requires monthly deduction and deposit.
Is a TAN required to deduct TDS on rent under Section 194IB?
No. TDS under Section 194IB can be deducted, deposited, and reported using only the tenant's and landlord's PAN through Form 26QC, without obtaining a TAN.
Is TDS deducted on a refundable security deposit?
No. TDS applies only to periodic rent payments. A refundable security deposit that does not form part of rent is not subject to TDS.
What form is used to deduct TDS on rent paid to a non-resident landlord?
TDS on rent paid to a non-resident landlord is governed by Section 195, and the tenant must obtain a TAN and file a quarterly return in Form 27Q.
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This article is for general informational purposes only and does not constitute tax or legal advice. TDS rates, thresholds, and forms are subject to change through future Finance Acts, CBDT notifications, and the new Income-tax Act, 2025. Please consult a qualified tax professional for advice specific to your situation.