Provisions of section 194IB regarding TDS on payment of rent exceeding Rs. 50,000 per month by individual or a HUF who are not covered underTax Audit

Effective 1st June 2017, section-194IB was introduced in the income tax act, 1961, by Finance Bill, 2017 to cover Rent payment in excess of Rs. 50,000 per month by Individuals or HUFs (Hindu Undivided Family) (not covered under Tax audit) to a resident under TDS deduction.

What is TDS under section 194IB?

  • IT is the TDS deducted by Tenant of a property making payment of rent exceeding ₹ 50,000 per month to a resident landlord.
  • Payment made under lease, sub lease, tenancy or any other agreement or arrangements for the use of any land or building or both are also covered under this section.
  • Refundable security deposit made to landlord at the time of taking property on rent by tenant should not be covered under this section.
  • In case there are more than one co-owners of the property, limit of Rs. 50,000 is applicable to each co-owner separately.


Mr. A is making payment of rent of Rs. 1,00,000 per month to Mr. X & Mr. Y who are co-owners of the property. Rent paid to Mr. X is Rs. 60,000 and to Mr. Y is Rs. 40,000. On which amount TDS is to be deducted?


A is liable to deduct tax @ 5% under section 194IB on rent of Rs. 60,000 paid to Mr. X as the amount of rent paid exceeds Rs. 50,000 and is not required to deduct TDS on rent of Rs. 40,000 paid to Mr. Y as the amount of rent paid does not exceed Rs. 50,000.

Applicability of section 194IB

  • This section is applicable to individual or a Hindu undivided family who are not required to have tax audit as per Income Tax Act in the immediately preceding financial year.
  • Salaried person paying rent more than Rs. 50,000 Per Month and claiming HRA are required to deduct TDS.
  • In case the Landlord/Lessor/Payee is a non-resident, liability to deduct TDS arises under section 195 of the Income-tax Act, 1961

Rate of TDS deduction under section 194IB

  • The rate of TDS deduction is 5% on the rent paid or payable, if landlord furnishes PAN. Rate from 14.05.20 to 31.03.21 is 3.75%.
  • The rate of TDS deduction is 20% on the rent paid or payable, if landlord not furnishes PAN

When to deduct TDS?

TDS is to be deducted only one time in a year and not in every month. To be deducted at earlier from the following:-

  • Time of credit of rent to the account of payee for the month of March or the last month of tenancy, if property is vacated during the year as applicable.
  • Time of payment of rent to payee for the month of March or the last month of tenancy, if property is vacated during the year as the case may be.

How to make payment of TDS?

Payment can be made using net banking at time of filing form 26QC or can be made afterwards by using e-payment on subsequent date or by visiting any Authorized bank branches after filing form 26QC.

What is form 26QC?

It is the challan-cum-statement for reporting the transactions liable to TDS on rent under section 194-IB of the Income-tax Act, 1961. It is an online form available on the TIN website.

What details are required to fill form 26QC?

  • PAN of landlord and tenant
  • Address of landlord and tenant
  • Address of let out Property
  • Period of Tenancy
  • Total amount of rent payable
  • Rent paid or payable for the month of March or the last month of tenancy
  • Interest or late fees payable
  • Date of tax deduction

Due date of payment of TDS

  • The due date of payment of TDS on rent is 30 days from the end of the month in which the deduction is made.
  • Example: If a taxpayer has made payment of rent in the month of March, then corresponding TDS should be deposited on or before thirty days i.e. April 30th.

Periodicity of filing form 26QC

Taxpayer/Tenant should furnish challan-cum-statement in Form 26QC in following scenarios:-

  • At the end of the FY or
  • In the month when the premise is vacated / termination of agreement.

Example (Rent Agreement falling across two FY):- Tenant Mr. A has entered into a tenancy agreement with Landlord Mr. X for the period of 11 months from October 1, 2019 to August 31, 2020 for rent of Rs. 60,000 per month.

In this case, Mr. A should file Form 26QC twice i.e. first at the end of the FY 2019-20 (on March 31, 2020) and second at the end of the tenancy period (on August 31, 2020).


Time of Filing 26QC

At the end of FY

At the end of tenancy

Financial year



Rent per month

Rs. 60,000

Rs. 60,000

No. of months

6 (Oct-19 to Mar-20)

5 (Apr-20 to Aug-21)

Total rent paid

Rs. 3,60,000

Rs. 3,00,000

Rent paid in last Month

Rs. 60,000

Rs. 60,000

TDS to be deducted @ 5%/3.75% on rent paid



Due date of filing 26QC



Issuance of TDS certificate in form 16C

The person deducting the TDS on the rent is required to issue Form 16C to the payee within 15 days from the due date of filing 26QC.


The article covers all important aspects under section 194IB which is useful for all concerned. Happy reading!!!

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