Overview of Section 194-IB – TDS on Rent Paid by Individuals or HUFs
Applicability of Section 194-IB
Any individual or Hindu Undivided Family (HUF) (not covered under tax audit under Section 44AB) who pays monthly rent exceeding ₹50,000 is required to deduct TDS @ 5% under Section 194-IB.
Definition of “Rent” Under 194-IB : “Rent” includes any payment under lease, sub-lease, tenancy, or agreement for the use of land, building, or both (excluding plant/machinery/furniture).
Paying monthly rent > INR 50,000 in FY 2024–25? You’re mandated to deduct and deposit TDS under Section 194-IB of the Income Tax Act, 1961
Latest Update – Budget 2024
From October 1, 2024, the TDS rate under Section 194-IB has been reduced from 5% to 2% for qualifying individuals and HUFs.
- Rate before 30.09.2024: 5%
- Rate from 01.10.2024 onward: 2%
- Note: 3.75% was applicable for a temporary period (14.05.2020–31.03.2021)
Form 26QC Deadline: 30th April 2025 (for full FY)
TDS Rates:
▪️ 5% – For rent paid between 01.04.2024 to 30.09.2024
▪️ 2% – For rent paid from 01.10.2024 onwards (Budget 2024 change)
Key Features of Section 194-IB- TDS on Rent Paid by Individuals or HUFs
- Who Should Deduct TDS?
- Individuals/HUFs not liable to tax audit under Section 44AB, i.e., turnover:
- Less than ₹1 crore (business)
- Less than ₹50 lakh (profession)
- Covered even if they are under presumptive taxation schemes (Sections 44AD, 44AE).
- When to Deduct TDS?
TDS must be deducted at the earlier of: - Time of credit of rent for the last month of the financial year or tenancy period
- Time of actual payment (cash, cheque, or electronic)
- TAN Not Required:
- Deduction under 194-IB does not require obtaining TAN (Section 203A not applicable).
- Only PAN of the deductor and landlord is needed.
- Maximum Deductible TDS:
Under Section 206AA, if the landlord does not provide PAN, TDS @ 20% applies.
However, deduction should not exceed the rent amount of the last month of the tenancy/financial year.
Compliance Requirements TDS on Rent Paid by Individuals or HUFs
- Form 26QC:
- Challan-cum-statement to be filed within 30 days from the end of the month in which rent is paid/due.
- Form 16C:
- TDS certificate to be issued by the tenant to the landlord within 15 days from the due date of Form 26QC filing.
- TAN not required – Only PAN-based remittance is sufficient and Applicable irrespective of the tax regime (old/new)
Consequences of Non-Compliance of TDS on Rent Paid by Individuals or HUFs
- Interest @ 1% per month – Section 201(1A)
- Late filing fee @ ₹200/day – Section 234E (max: TDS amount)
- Penalty up to TDS amount – Section 271H
- Possible Scrutiny/Notices from Income Tax Department
Don’t miss this! Deduct, deposit, and file on time to stay compliant.
Rajput Jain & AssociatesRajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders.
Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields.
We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.