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HomeDirect TaxPaying Monthly Rent Above Rs. 50,000? Here's How to Handle TDS Under...

Paying Monthly Rent Above Rs. 50,000? Here’s How to Handle TDS Under Section 194-IB

Direct Tax

Published on

By Amit Sharma
Paying Monthly Rent Above Rs. 50,000? Here's How to Handle TDS Under Section 194-IB

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If you’re an individual or a member of a Hindu Undivided Family (HUF) paying monthly rent of more than ₹50,000, you may be wondering whether Tax Deducted at Source (TDS) needs to be deposited every month or just once a year. The short answer: you only need to deduct and deposit TDS once a year, thanks to Section 194-IB of the Income Tax Act, 1961.

Who Needs to Deduct TDS Under Section 194-IB?

Section 194-IB applies to:

  • Individuals or HUFs not liable to tax audit under Section 44AB.
  • Tenants paying monthly rent exceeding ₹50,000 to a resident landlord.

This provision was introduced to bring high-value rental transactions under the tax net without burdening individual taxpayers with monthly compliance.

TDS Deduction: When and How Much?

Instead of deducting TDS monthly, tenants must:

  • Deduct 5% (not 2%) from the total annual rent.
  • Do this once during the payment for March or when vacating the property, whichever is earlier.

Example:
If you’re paying ₹60,000/month as rent in Mumbai:

  • Annual rent = ₹7,20,000
  • TDS @5% = ₹36,000
  • Deduct ₹36,000 in March or at the time of vacating.

🔍 Important: If the landlord doesn’t furnish their PAN, TDS must be deducted at 20%.

How to Comply with Section 194-IB

  1. Deduct TDS: Calculate 5% on total rent and deduct accordingly.
  2. File Form 26QC: Submit this challan-cum-statement within 30 days of deduction.
  3. Issue Form 16C: Provide this TDS certificate to your landlord within 15 days of filing Form 26QC.

Deadlines Matter

Missing the due dates can attract penalties and interest. Hence, mark your calendars for March or your vacating date to ensure timely compliance.

Exceptions to the Rule

  • Non-resident landlords: Covered under Section 195, not 194-IB.
  • Rent ≤ ₹50,000/month: No TDS deduction required.

Bottom Line

Paying rent above ₹50,000 per month doesn’t mean monthly TDS filings. Section 194-IB simplifies the process by allowing one-time annual deduction, making it easier for salaried individuals and small HUFs to stay compliant without constant paperwork.

Read More: Implementation Of Invoice-Wise Reporting In Form GSTR-7 In GST Portal Delayed: GSTN 

Amit Sharma
Amit Sharma
Amit Sharma is the Content Editor at JurisHour. He has been writing about the Indian legal market. He has covered tax & company litigation stories from the Supreme Court, High Courts and Various Tribunals. Amit graduated from MLSU Law College with B.A.LL.B. and also holds an LL.M. from MLSU, Udaipur, Rajasthan. An Advocate in Taxation, and practised in Tribunals as well as Rajasthan High Court and pursued Masters in Constitutional Law. He started out small with little resources but a big plan to take tax legal education to the remotest locations across India and eventually to the world. His vision is to make tax related legal developments accessible to the masses.

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