TDS on rent affects almost every business and many salaried families who pay high rent. The rules differ depending on who pays the rent, what is being rented and, from 1 April 2026, which Income-tax Act governs the payment. Getting the basics right avoids interest, late fees and awkward conversations with landlords about missing credits.
This guide explains the two regimes carried over from sections 194-I and 194-IB, the thresholds and rates, how GST and advances are treated, and the new forms under the Income-tax Act 2025.
Key takeaways
- Businesses and other specified payers deduct TDS on rent at 2% for plant, machinery or equipment and 10% for land, building or furniture, where rent exceeds ₹50,000 for a month or part of a month.
- Individuals and HUFs who are not covered by the old section 194-I deduct 2% where monthly rent exceeds ₹50,000, generally once a year; no TAN is needed.
- From 1 April 2026 both are part of the TDS table in section 393(1) of the Income-tax Act 2025; rates and thresholds were retained.
- Individual tenants now use Form 141 (replacing Form 26QC) and issue Form 132 to the landlord; business payers report in Form 140 and issue Form 131.
- Where GST is charged separately on rent, TDS is deducted on the rent excluding GST.
Two regimes for TDS on rent
Rent for this purpose is broadly defined. It covers payments under any lease, sub-lease, tenancy or arrangement for the use of land, building (including factory buildings), land appurtenant to a building, machinery, plant, equipment, furniture or fittings, whether or not owned by the payee.
| Point | Business payers (old section 194-I) | Individual/HUF tenants (old section 194-IB) |
|---|---|---|
| Who deducts | Companies, firms, LLPs, and individuals/HUFs whose accounts must be audited under the tax audit provisions | Individuals and HUFs not covered in the first column |
| Threshold | Rent above ₹50,000 for a month or part of a month | Rent above ₹50,000 for a month or part of a month |
| Rate | 2% plant/machinery/equipment; 10% land/building/furniture | 2% |
| When | At credit or payment, whichever is earlier | Generally once, on rent for the last month of the tax year or of the tenancy, if earlier |
| TAN | Required | Not required; PAN-based filing |
| Return/statement | Quarterly return (Form 140 from tax year 2026-27) | Challan-cum-statement (Form 141 from 2026-27) |
The ₹50,000-per-month test for business payers applies from 1 April 2025. Before that, the threshold was an annual figure, so older rent agreements and ERP settings may need updating.
What changed from 1 April 2026
The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. Non-salary TDS provisions are now set out in a table under section 393(1), and rent appears as separate entries in that table. The substance of the rules was carried over, but forms and references changed.
A practical point for March 2026: the Act that applies depends on the earlier of credit or payment. Rent for March 2026 credited on 31 March 2026 remains under the 1961 Act, even if paid in April, and is reported in the old forms. For a broader view, see our TDS rate chart for FY 2026-27.
| Item | Up to 31 March 2026 | From 1 April 2026 |
|---|---|---|
| Individual tenant’s challan-cum-statement | Form 26QC | Form 141 |
| Certificate by individual tenant | Form 16C | Form 132 |
| Business payer’s quarterly return | Form 26Q | Form 140 |
| Business payer’s certificate | Form 16A | Form 131 |
| Landlord’s credit statement | Form 26AS | Form 168 |
Worked examples
Example 1: a company renting an office
A company pays office rent of ₹1,20,000 per month plus 18% GST shown separately. Rent exceeds ₹50,000 for the month, so it deducts 10% of ₹1,20,000, that is ₹12,000 each month, and deposits it by the 7th of the next month.
Example 2: a salaried family renting a flat
A salaried individual pays ₹60,000 per month for a flat. Rent exceeds ₹50,000 per month, so TDS at 2% applies. Deducted once on the March rent, the TDS for a full year is 2% of ₹7,20,000, that is ₹14,400, deducted from the last month’s rent and paid through Form 141.
If the landlord does not furnish a PAN, a higher rate applies, but for individual tenants the deduction is capped at the rent for the last month of the year or tenancy.
Practical issues and how to handle them
- Security deposits: a refundable deposit is not rent and does not attract TDS. A non-refundable or adjustable deposit that is really advance rent generally does.
- Advance rent: TDS applies at the time of payment, since the earlier of credit or payment triggers deduction.
- Common area maintenance: if charged separately under a distinct arrangement, it may fall under the TDS provision for contracts rather than rent; review the agreement.
- Multiple landlords: where a property is jointly owned and each co-owner receives a defined share, the threshold is generally tested on each owner’s share.
- Non-resident landlords: rent paid to a non-resident is dealt with under the separate non-resident TDS provisions, often at higher rates and with a TAN requirement.
- Lower deduction certificate: a landlord with lower tax liability can apply for a certificate for lower or nil deduction; the tenant then deducts at the certified rate.
Due dates and consequences
- Business payers deposit TDS by the 7th of the following month (30 April for March) and file quarterly returns.
- Individual tenants file Form 141 within 30 days from the end of the month of deduction and issue the certificate after downloading it from the TRACES portal.
- Late deduction or deposit attracts interest; late statements attract a fee; and for businesses, non-deduction can lead to a partial disallowance of rent expense until TDS is paid. Our note on TDS default notices explains how to correct defaults.
Frequently asked questions
Do I need a TAN to deduct TDS on house rent?
No. An individual or HUF tenant not covered by the business-payer rules uses a PAN-based challan-cum-statement, now Form 141, without a TAN.
Is TDS deducted on the GST portion of rent?
No, where GST is shown separately in the invoice, TDS is deducted on the rent excluding GST.
My rent is ₹45,000 a month. Do I deduct TDS?
No. The obligation arises only where rent exceeds ₹50,000 for a month or part of a month.
Which form should I use for rent paid in April 2026?
Individual tenants use Form 141 and business payers report in Form 140, as the payment falls under the Income-tax Act 2025.
If you would like help setting up rent TDS for your offices or reviewing your tenancy payments for the year, our team would be glad to assist.
This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.
