TDS on rent is the tax a tenant deducts from rent and pays to the government on the landlord's behalf. From 1 April 2026, the old Sections 194-I and 194-IB are replaced by the rent entries in Section 393 of the Income-tax Act, 2025, with new forms. This guide explains who must deduct TDS on rent in FY 2026-27, the rates and the ₹50,000-a-month limit, how salaried tenants deduct 2% once a year, rent paid to NRIs, and the step-by-step process, with worked examples.
Quick answer: a salaried tenant paying more than ₹50,000 a month deducts 2% once a year, from the last month's rent, with no TAN needed. Businesses that are tax-audited deduct 10% on rent of land or building and 2% on machinery, every month. Rent to an NRI landlord has TDS at 30% plus cess with no threshold. Example: rent of ₹55,000 a month for the full year → TDS of ₹13,200, deducted from March rent.
TDS on Rent Rules for FY 2026-27 at a Glance
| Tenant | New section (old) | Threshold | Rate | When deducted |
|---|---|---|---|---|
| Individual or HUF not liable to tax audit (most salaried tenants) | 393(1) Sl. 2(i) (194-IB) | Rent above ₹50,000 for a month or part of a month | 2% (land or building only) | Once: last month of the year or of the tenancy |
| Company, firm, LLP, or individual / HUF under tax audit | 393(1) Sl. 2(ii) (194-I) | Rent above ₹50,000 for a month or part of a month | 10% land, building, furniture; 2% plant and machinery | Every time rent is paid or credited |
| Anyone paying rent to a non-resident landlord | 393(2) (195) | No threshold | 30% plus surcharge and 4% cess (or DTAA / certificate rate) | Every payment |
The rates and limits are the same as FY 2025-26. Only the section numbers and forms changed with the new Act. For all other TDS rates, see our TDS rate chart FY 2026-27.
TDS on Rent Paid by Salaried Tenants (2% Rule)
If you are an individual or HUF whose accounts are not audited, and you pay rent of more than ₹50,000 for any month to a resident landlord, you must deduct TDS at 2%.
- Only once a year: deduct from the rent for the last month of the tax year (March) or the last month of the tenancy, whichever is earlier, on the rent for that whole period.
- No TAN needed: you deduct and pay using your own PAN and your landlord's PAN.
- Form 141 (which replaced Form 26QC): pay the TDS and file the details online within 30 days from the end of the month in which you deducted it.
- Form 132 (which replaced Form 16C): download the TDS certificate from TRACES after Form 141 is processed and give it to your landlord.
- Only land or building: this 2% rule does not apply to machinery hired by individuals.
The landlord claims credit for this TDS in their own return. Salaried tenants who claim HRA must also give their employer the landlord's PAN when rent is over ₹1 lakh a year; check your claim with our HRA exemption calculator.
TDS on Rent Paid by Businesses (10% / 2%)
Companies, firms, LLPs and individuals or HUFs whose accounts were tax-audited in the previous year deduct TDS when rent paid to a resident is more than ₹50,000 for a month or part of a month:
- 10% on rent of land, building (including factory building), furniture and fittings.
- 2% on rent of plant, machinery or equipment.
- Deduct when rent is credited or paid, whichever is earlier; deposit by the 7th of the next month (30 April for March); file the quarterly return in Form 140 (earlier 26Q); and issue Form 131 (earlier 16A) to the landlord.
- TDS is on the rent excluding GST, where GST is shown separately in the invoice.
TDS on Rent Paid to an NRI Landlord
When the landlord is a non-resident, the payment is covered by Section 393(2) (earlier Section 195), and the rules are stricter:
- No threshold: even ₹10,000 a month has TDS.
- Rate: 30% plus surcharge if applicable and 4% cess, unless the landlord has a lower deduction certificate or a lower tax-treaty rate applies.
- TAN required: the tenant must get a TAN and file the quarterly non-resident TDS return.
- Remittance: sending rent abroad needs the online remittance declaration and, where required, a CA certificate (earlier Forms 15CA and 15CB).
TDS on Rent Examples
| Situation | Working | TDS |
|---|---|---|
| Salaried tenant, ₹55,000 a month, April to March | 2% × ₹6,60,000, deducted from March rent | ₹13,200 |
| Salaried tenant, ₹60,000 a month, leaves in August | 2% × ₹3,00,000 (5 months), deducted from August rent | ₹6,000 |
| Salaried tenant, ₹45,000 a month | Not above ₹50,000 a month | Nil |
| Salaried tenant, ₹55,000 a month, landlord has no PAN | 20% × ₹6,60,000 = ₹1,32,000, but capped at the last month's rent | ₹55,000 |
| Company renting an office at ₹80,000 a month | 10% every month | ₹8,000 a month |
| Audited firm hiring machinery at ₹70,000 a month | 2% every month | ₹1,400 a month |
| Rent of ₹70,000 a month to an NRI landlord | 30% + 4% cess = 31.2% | ₹21,840 a month |
In the first example, the tenant pays the landlord ₹41,800 in March (₹55,000 − ₹13,200) and deposits ₹13,200 through Form 141 by 30 April.
How to Pay TDS on Rent: Step by Step (Salaried Tenant)
- Check the limit: is rent for any month more than ₹50,000? If not, no TDS.
- Collect the landlord's PAN and confirm it is valid and linked with Aadhaar.
- Work out TDS at 2% of the rent for the year (or tenancy period) and deduct it from the last month's rent.
- Fill Form 141 on the e-filing portal, choosing the rent option, and pay online within 30 days from the end of the month of deduction.
- Download Form 132 from TRACES once processed and give it to your landlord.
Use the Income Tax e-filing portal for Form 141. The landlord can check the credit in their Form 168 (earlier 26AS).
Security Deposit, Advance Rent and Other Cases
- Refundable security deposit: no TDS, because it is not rent. If any part is adjusted against rent, TDS applies to that part.
- Advance rent: TDS applies when it is paid or credited, on the full advance.
- Two or more landlords: the ₹50,000 limit applies to each landlord's share.
- Landlord's income below taxable limit: the landlord can give the tenant Form 121 (which replaced Forms 15G and 15H) to avoid TDS, or apply for a lower deduction certificate.
- Paying in cash does not remove TDS.
Interest and Fees for Not Deducting TDS on Rent
- Interest of 1% a month if TDS is not deducted, and 1.5% a month if deducted but paid late.
- A late fee of ₹200 a day for late Form 141 or quarterly returns, limited to the TDS amount.
- For businesses, 30% of the rent expense can be disallowed if TDS is not deducted and paid.
See the Income Tax Department for the Act and Rules. Related: TDS on salary guide · income tax calculator · HRA exemption rules
Frequently Asked Questions
What is the TDS rate on rent in FY 2026-27?
2% for individuals and HUFs not under audit, 10% on land or building and 2% on machinery for businesses, once rent is above ₹50,000 a month. Rent to NRIs has TDS at 30% plus cess.
What is the limit for TDS on rent?
Rent of more than ₹50,000 for a month or part of a month. It is a monthly test, not an annual one. Rent to a non-resident has no limit.
Which section covers TDS on rent from April 2026?
Section 393 of the Income-tax Act, 2025: Table Sl. No. 2(i) for individuals and HUFs not under audit (earlier 194-IB) and Sl. No. 2(ii) for others (earlier 194-I). Rent to non-residents is under Section 393(2).
Do salaried employees need to deduct TDS on rent?
Yes, if rent is more than ₹50,000 a month. They deduct 2% once, from the last month's rent of the year or tenancy, and pay it through Form 141. No TAN is needed.
Which form replaced Form 26QC?
Form 141, a single challan-cum-statement that also replaced Forms 26QB, 26QD and 26QE. The certificate to the landlord is now Form 132 instead of Form 16C.
What is the due date to pay TDS on rent through Form 141?
Within 30 days from the end of the month in which TDS is deducted. For TDS deducted from March rent, the due date is 30 April.
What if my landlord does not have a PAN?
TDS is 20% instead of 2%, but for individual tenants it cannot be more than the last month's rent. Ask the landlord for PAN to avoid this.
Is TDS deducted on a security deposit?
No, if the deposit is refundable and not adjusted against rent. Any amount adjusted against rent is treated as rent and attracts TDS.
What is the TDS rate on rent paid to an NRI?
30% plus surcharge if applicable and 4% cess, with no threshold, unless a lower deduction certificate or tax-treaty rate applies. The tenant needs a TAN.
What happens if I forget to deduct TDS on rent?
You pay interest of 1% a month until deduction and 1.5% a month until deposit, plus a late fee of ₹200 a day for late filing, up to the TDS amount.