Individuals and HUFs paying rent above Rs. 50,000 per month must deduct TDS at 2% under Section 393(1) [Table Sl. No. 2(i)] of the Income-tax Act, 2025 (erstwhile Section 194-IB). No TAN is required — use PAN, file Form 26QC, and issue Form 16C.
Section 194-IB under the Income-tax Act, 2025
Section 194-IB of the Income-tax Act, 1961 requires certain Individuals and HUFs to deduct tax from rent paid for use of land, building, or both. Under the Income-tax Act, 2025 (effective for transactions on or after 1 April 2026), this provision is consolidated as Section 393(1) [Table Sl. No. 2(i)]. The substantive rules — threshold, rate, forms, and compliance — remain largely unchanged.
Official sourceCBDT Tutorial: TDS on Rent by Certain Individual or HUF (PDF)Official Income Tax Department guide on Section 194-IB compliance, forms, and MCQsOverview of the Provision
Section 194-IB provides that every Individual and HUF, whose turnover or gross receipt from business or profession does not exceed Rs. 1 crore in case of business and Rs. 50 lakhs in case of a profession in the immediately preceding financial year, shall deduct tax from the payment of rent for use of any land or building or both. The tax shall be deducted at the rate of 2% if the rent paid or payable exceeds Rs. 50,000 per month or part of the month.
Deductor
Every Individual or HUF shall be required to deduct tax at source under this provision if his gross receipts or turnover in the financial year immediately preceding the financial year in which rent is paid or credited does not exceed Rs. 1 crore in the case of business and Rs. 50 lakhs in case of a profession.
- 1The tax shall be deducted even if the individual is not engaged in any business or profession and is earning only salary or other income.
- 2There is no requirement to apply for or obtain a Tax Deduction or Collection Account Number (TAN). The deductor can use his PAN in place of TAN.
Meaning of Rent
Rent means any payment under any lease, sub-lease, tenancy, or any other agreement or arrangement for use of any land or building or both.
Deductee and Time of Deduction
Tax is required to be deducted only if the rent is paid or payable to a person who is resident in India. If the sum is payable to a non-resident, tax shall be deducted under Section 195 of the Income-tax Act, 1961 (Section 393(2) of the Income-tax Act, 2025).
| Situation | Time of deduction |
|---|---|
| Tenancy subsists till the last month of the financial year | At the time of payment or credit of rent for the last month of the financial year, whichever is earlier |
| Property is vacated during the year | At the time of payment or credit of rent for the last month of tenancy, whichever is earlier |
Rate of TDS and Threshold Limit
- 1TDS at 2% if rent exceeds Rs. 50,000 for a month or part of a month during the financial year.
- 2The rate is not increased by Surcharge and Health & Education Cess.
- 3If the deductee does not furnish PAN, tax shall be deducted at 20% under Section 206AA (Section 397(2) of the Income-tax Act, 2025). TDS in such cases cannot exceed the rent payable for the last month of the year or the last month of tenancy, as applicable.
Exemption from TDS
No tax is required to be deducted from any sum paid or payable to the following:
- 1The Government
- 2The Reserve Bank of India
- 3A corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income tax on its income
- 4A Mutual Fund specified under Section 10(23D)
Deposit of TDS
Tax deducted under this provision is required to be deposited to the credit of the Central Government through Form 26QC within 30 days from the last day of the month in which the tax was deducted.
Filing of TDS Statement
The person responsible for deduction of tax at source under this provision is required to furnish a challan-cum-statement in Form 26QC electronically.
TDS Certificate
The deductor shall issue a TDS certificate to the assessee in Form No. 16C within 15 days from the due date of furnishing of the TDS statement.
Consequences for Failure to Deduct or Deposit Tax
Where any person responsible for deducting tax at source fails to deduct tax or, after deducting, fails to deposit the same, he shall be treated as assessee-in-default. In that case, interest under Section 201 of the Income-tax Act, 1961 (Section 398 of the Income-tax Act, 2025) shall be applicable.
- 1Failure to deduct: interest at 1% per month or part of the month, from the date tax was required to be deducted till the date it is actually deducted.
- 2Failure to deposit after deduction: interest at 1.5% per month or part thereof, from the date tax was deducted till the date it is deposited to the Government.
Penalty and Prosecution
Failure to comply with TDS provisions under this section may attract penalties and prosecution as follows:
- 1Failure to deduct tax at source — penalty under Section 271C (Section 448 of the Income-tax Act, 2025).
- 2Tax deducted but not deposited — penalty under Section 221 and prosecution under Section 276B (Section 476 of the Income-tax Act, 2025).
- 3No prosecution under Section 276B if the person proves reasonable cause for the failure. An application for compounding of offence may also be filed.
Consequences for Failure to Furnish TDS Statement
Where any person fails to furnish a TDS statement, Section 234E (Section 427 of the Income-tax Act, 2025) applies. The deductor is liable to pay fees at Rs. 200 per day during which the default continues, subject to a cap equal to the amount of TDS. Additionally, penalties under Section 271H (Section 445 of the Income-tax Act, 2025) of Rs. 10,000 (extendable to Rs. 1,00,000) and Section 272A (Section 465 of the Income-tax Act, 2025) of Rs. 500 per day may apply.
Consequences for Failure to Issue TDS Certificates
Where any person responsible for issuing TDS certificates fails to issue them, penalty under Section 272A (Section 465 of the Income-tax Act, 2025) of Rs. 500 for every day during which the failure continues shall be applicable.
MCQs on TDS on Rent under Section 194-IB
Quick answers
Essential Section 194-IB points — expand each question for the full answer.
01What is TDS on rent by Individual or HUF under Section 194-IB?
Individuals and HUFs paying rent above Rs. 50,000 per month must deduct TDS at 2% under Section 393(1) [Table Sl. No. 2(i)] of the Income-tax Act, 2025 (erstwhile Section 194-IB). No TAN is required — use PAN, file Form 26QC, and issue Form 16C.
02Who must deduct TDS on rent under Section 194-IB?
Every Individual and HUF — including salaried persons not engaged in business or profession — must deduct TDS if rent paid or payable exceeds Rs. 50,000 per month or part of the month, provided their turnover or gross receipts in the immediately preceding financial year did not exceed Rs. 1 crore (business) or Rs. 50 lakhs (profession). Under the Income-tax Act, 2025, this corresponds to Section 393(1) [Table Sl. No. 2(i)].
03Is TAN required for TDS on rent under Section 194-IB?
No. There is no requirement to obtain a Tax Deduction or Collection Account Number (TAN). The deductor can use his PAN in place of TAN for deducting and depositing tax under this provision.
04Which form is used to deposit TDS and file the statement for rent under Section 194-IB?
Tax deducted must be deposited through Form 26QC (challan-cum-statement) within 30 days from the last day of the month in which tax was deducted. The deductor must issue Form 16C as the TDS certificate within 15 days from the due date of furnishing the statement.
05What is the TDS rate if the tenant does not furnish PAN?
If the deductee does not furnish PAN to the deductor, tax shall be deducted at 20% under Section 206AA of the Income-tax Act, 1961 (Section 397(2) of the Income-tax Act, 2025). In such cases, TDS cannot exceed the rent payable for the last month of the year or the last month of tenancy.
Q1. Threshold limit for deduction
The tax under Section 194-IB shall be deducted if the rent paid or payable exceeds ________ per month or part of the month.
- 1(a) Rs. 50,000
- 2(b) Rs. 40,000
- 3(c) Rs. 20,000
- 4(d) Rs. 15,000
Correct answer: (a) Rs. 50,000 — The tax under Section 194-IB shall be deducted if the rent paid or payable exceeds Rs. 50,000 per month or part of the month.
Q2. Rate of TDS
What is the tax rate for deduction of tax under Section 194-IB?
- 1(a) 2%
- 2(b) 10%
- 3(c) 1%
- 4(d) 0.1%
Correct answer: (a) 2% — Tax shall be deducted at 2% under Section 194-IB if rent exceeds Rs. 50,000 per month or part of the month.
Q3. TAN requirement
TAN is not required for tax deduction under Section 194-IB. (a) True (b) False
Correct answer: (a) True — There is no requirement to obtain TAN. The deductor can use his PAN in place of TAN.
Q4. TDS return form
Which TDS return is required if tax is deducted under Section 194-IB?
- 1(a) 26Q
- 2(b) 26QB
- 3(c) 27Q
- 4(d) 26QC
Correct answer: (d) 26QC — The deductor must furnish a challan-cum-statement in Form 26QC electronically.
Q5. Deposit timeline
Tax deducted under Section 194-IB must be deposited through Form 26QC within ________ from the last day of the month in which tax was deducted.
- 1(a) 15 days
- 2(b) 30 days
- 3(c) 7 days
- 4(d) 10 days
Correct answer: (b) 30 days — Tax must be deposited within 30 days from the last day of the month in which the tax was deducted.
Q6. TDS certificate form
Which form is issued as the TDS certificate if tax is deducted under Section 194-IB?
- 1(a) 16A
- 2(b) 16B
- 3(c) 16C
- 4(d) 16D
Correct answer: (c) 16C — The deductor shall issue Form 16C within 15 days from the due date of furnishing the TDS statement.
Need Help with TDS on Rent?
PJRJ & Associates assists individuals, HUFs, and businesses with TDS compliance — including Form 26QC filing, Form 16C issuance, PAN-based deposits, and regularisation of defaults with interest and penalty computation.
- 1TDS on rent advisory for tenants and landlords
- 2Form 26QC challan-cum-statement filing
- 3Form 16C certificate preparation
- 4TDS default regularisation and interest computation
- 5Income tax notice and assessment representation
Quick answers
Direct answers to common questions on this topic.
What is TDS on rent by Individual or HUF under Section 194-IB?
Individuals and HUFs paying rent above Rs. 50,000 per month must deduct TDS at 2% under Section 393(1) [Table Sl. No. 2(i)] of the Income-tax Act, 2025 (erstwhile Section 194-IB). No TAN is required — use PAN, file Form 26QC, and issue Form 16C.
Who must deduct TDS on rent under Section 194-IB?
Every Individual and HUF — including salaried persons not engaged in business or profession — must deduct TDS if rent paid or payable exceeds Rs. 50,000 per month or part of the month, provided their turnover or gross receipts in the immediately preceding financial year did not exceed Rs. 1 crore (business) or Rs. 50 lakhs (profession). Under the Income-tax Act, 2025, this corresponds to Section 393(1) [Table Sl. No. 2(i)].
Is TAN required for TDS on rent under Section 194-IB?
No. There is no requirement to obtain a Tax Deduction or Collection Account Number (TAN). The deductor can use his PAN in place of TAN for deducting and depositing tax under this provision.
Which form is used to deposit TDS and file the statement for rent under Section 194-IB?
Tax deducted must be deposited through Form 26QC (challan-cum-statement) within 30 days from the last day of the month in which tax was deducted. The deductor must issue Form 16C as the TDS certificate within 15 days from the due date of furnishing the statement.
What is the TDS rate if the tenant does not furnish PAN?
If the deductee does not furnish PAN to the deductor, tax shall be deducted at 20% under Section 206AA of the Income-tax Act, 1961 (Section 397(2) of the Income-tax Act, 2025). In such cases, TDS cannot exceed the rent payable for the last month of the year or the last month of tenancy.
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