Section 194-IB: TDS on Rent Exceeding ₹50,000 per Month
How salaried tenants and non-audit individuals must deduct TDS on high-value residential rent using Form 26QC.
If you rent an apartment, villa, or office as a salaried employee or non-business individual and pay more than ₹50,000 per month, you are covered under Section 194-IB of the Income Tax Act.
Originally introduced at 5%, the Finance Act 2024 revised the TDS rate downwards to 2% to reduce friction and ease cash flows for both tenants and landlords.
What's in this article
Who Must Deduct Under Section 194-IB?
Section 194-IB applies exclusively to Individuals and HUFs who are NOT liable for tax audit under Section 44AB(a)/(b) (i.e., non-business individuals and small business owners below audit thresholds).
If your business is subject to tax audit, rent is governed under Section 194I (at 10% with a ₹2.4 Lakh annual limit), not Section 194-IB.
The threshold is ₹50,000 for a month or part of a month. If monthly rent is ₹52,000, TDS is deductible on the entire ₹52,000.
Deduction Timing and Form 26QC
You do NOT need to deduct TDS every single month. Under Section 194-IB, tax is deducted only ONCE in a financial year: either in the last month of the financial year (March), or in the last month of tenancy if you vacate the property earlier.
Payment is submitted online through Form 26QC on the Income Tax portal within 30 days from the end of the month in which deduction was made.
Important safeguard: The TDS amount deducted under Section 194-IB cannot exceed the rent payable for the last month of the tenancy.
Key takeaways
- 01Applies to individual tenants paying over ₹50,000 rent per month.
- 02The rate is now 2% (revised from 5% in Finance Act 2024).
- 03Deduction is executed once annually in March or the final tenancy month.
- 04Remitted using PAN via Form 26QC without needing a TAN.
Run withholding tax calculations for your invoice:
Open TDS CalculatorReference
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Written & Verified By
Tax Research & Computational Lead
Specializing in direct taxation under the Indian Income Tax Act 1961, withholding compliance, and corporate accounting. All rates and formulas are cross-verified against official Union Budget Finance Acts and CBDT notifications.