TDS on Rent Above ₹50,000 – Section 194IB Complete Guide (2026)

If you pay rent above ₹50,000 per month in India, you are legally required to deduct TDS and file Form 26QC. Most tenants don't know this — and many receive penalty notices as a result. This guide explains everything clearly.

What is Section 194IB?

Section 194IB of the Income Tax Act, 1961 requires individuals and Hindu Undivided Families (HUFs) to deduct TDS (Tax Deducted at Source) at 5% when paying rent above ₹50,000 per month to a resident Indian landlord. This rule applies even if you are not a business or company — it specifically targets individual salaried tenants.

Who must deduct TDS on rent?

You must deduct TDS under Section 194IB if all three of the following apply:

• You are an individual or HUF (not a company or firm)
• Your monthly rent exceeds ₹50,000 (even ₹50,001 triggers this)
• Your landlord is a resident Indian (NRI landlords fall under Section 195)

If you are a company paying rent, Section 194I applies to you — different rules, different rate.

TDS Rate and Calculation

The TDS rate under Section 194IB is 5% of the monthly rent. TDS is deducted once a year (at the time of last payment of rent) or when vacating, whichever is earlier. However, most tax advisors recommend deducting and filing monthly to avoid large one-time deductions.

Example: Monthly rent = ₹60,000. TDS = ₹60,000 × 5% = ₹3,000. Amount paid to landlord = ₹57,000.

If the landlord has not provided PAN, TDS rate increases to 20%.

What is Form 26QC?

Form 26QC is the TDS return form filed by tenants under Section 194IB. It is filed on the TRACES portal (tin.tin.nsdl.com) after depositing the TDS amount to the government via Challan 281. The form captures tenant PAN, landlord PAN, rent amount, and TDS details.

Filing Deadline

Form 26QC must be filed within 30 days from the end of the financial year (i.e., by 30th April) if TDS is deducted once at year end. If TDS is deducted monthly, it should be filed within 30 days of the end of the month in which TDS was deducted.

Step-by-Step: How to File Form 26QC

• Step 1: Calculate TDS — 5% of monthly rent
• Step 2: Deduct TDS from rent payment to landlord
• Step 3: Deposit TDS to government via Challan 281 on TIN-NSDL portal
• Step 4: File Form 26QC on TRACES using the Challan details
• Step 5: Download Form 16C (TDS certificate) and share with landlord

Or use RentSafe — we handle all steps for ₹299. File now →

Penalties for Non-Compliance

• Section 271C: Penalty up to ₹1,00,000 for failure to deduct TDS
• Section 234E: Late filing fee of ₹200 per day until Form 26QC is filed (maximum equal to TDS amount)
• Section 276B: In severe cases, prosecution for willful failure to deposit TDS
• Interest under Section 201(1A): 1.5% per month on unpaid TDS from date of deduction to date of deposit

What Your Landlord Gets

After you file Form 26QC, you must issue Form 16C (TDS certificate) to your landlord within 15 days of filing. Your landlord uses this to claim TDS credit in their Income Tax Return. This is why landlords often ask for it — it reduces their tax liability.

FAQs

I've been paying ₹60,000 rent for 2 years without filing TDS. What do I do?

File for past quarters immediately. The ₹200/day penalty stops when you file. Our arrears filing service can handle past quarters for ₹499/quarter.

My landlord refuses to give their PAN. What happens?

Without landlord PAN, you must deduct TDS at 20% instead of 5%, and Form 26QC cannot be filed without it. Most landlords share PAN willingly — it only helps them claim the TDS credit.

Do I need a TAN to file Form 26QC?

No. Under Section 194IB, individuals are not required to obtain a TAN. Your PAN is sufficient.

My rent started mid-year. How do I calculate TDS?

TDS applies from the month rent first exceeded ₹50,000. Calculate 5% on each month's rent where the threshold was crossed.