1Who deducts TDS on rent?
Businesses (and others above the audit threshold) under Section 194I, and individuals/HUFs paying rent over Rs 50,000 a month under Section 194IB. The tenant deducts and deposits it; it shows in the landlord's 26AS.
Quick answer
Businesses deduct TDS on rent under 194I; individuals paying over Rs 50,000 a month deduct it under 194IB. Here's who deducts what.
Under Section 194I, businesses and others (not individuals/HUFs below the audit threshold) deduct TDS on rent paid above the annual threshold — at one rate for plant and machinery and another for land, building and furniture. The tenant deducts and deposits it, and it shows in the landlord's 26AS.
Section 194IB covers individuals and HUFs (not covered by 194I) who pay rent exceeding Rs 50,000 a month. They must deduct TDS on the rent at the prescribed rate, typically once a year (or when the tenancy ends). This catches high-rent residential tenancies.
For the landlord, the TDS deducted is not a cost but a prepayment — it appears in their 26AS/AIS and is claimed against their final tax. So landlords should reconcile and claim it, and tenants should deposit it correctly so the landlord gets credit.
If the landlord's PAN isn't provided, TDS is deducted at a higher rate. So both sides benefit from the landlord sharing PAN — the tenant deducts the normal rate and the landlord's credit is properly recorded.
The tenant who deducts must deposit the TDS and file the required statement (or challan-cum-statement for 194IB) within the deadlines, or face interest and fees. Getting this right keeps both tenant and landlord compliant.
Businesses (and others above the audit threshold) under Section 194I, and individuals/HUFs paying rent over Rs 50,000 a month under Section 194IB. The tenant deducts and deposits it; it shows in the landlord's 26AS.
When monthly rent exceeds Rs 50,000, under Section 194IB — the individual tenant deducts TDS at the prescribed rate, typically once a year or at the end of the tenancy.
No — it's a prepayment of the landlord's tax. It appears in their 26AS and is claimed against their final tax, so landlords should reconcile and claim the credit.
Paying or receiving high rent? Write to the firm and we'll handle the TDS deduction, deposit and credit correctly.