GUIDE FOR LANDLORDS
TDS on rent in India: who deducts it, how much, and on what
If your tenant is a company, a firm, or an individual paying a large rent, part of the rent you are owed never reaches your bank account. The tenant deducts TDS (tax deducted at source) and pays it to the government in your name. You still receive the full rent on paper: the TDS is credited against your income tax.
Which section applies depends on who the tenant is.
Tenant is an individual or HUF: section 194-IB
This covers most residential tenants who do not have their own books audited.
- When: the rent is more than ₹50,000 a month.
- Rate: 2% of the rent (it was 5% until 30 September 2024).
- How often: once a year, from the rent for the last month of the financial year, or the last month of the tenancy if it ends earlier.
- Paperwork for the tenant: the tenant pays it with Form 26QC using their PAN (no TAN needed), and gives you Form 16C as the certificate.
- If the landlord has no PAN: the rate becomes 20%, but not more than the last month's rent.
Tenant is a company, firm, or other business: section 194-I
This covers shops, offices and flats rented by companies, and individuals whose accounts are audited.
- When: the rent is more than ₹50,000 for a month or part of a month (from 1 April 2025; before that, more than ₹2,40,000 in a year).
- Rate: 10% for land, buildings and furniture; 2% for plant and machinery.
- How often: every month, when the rent is paid or credited.
- Paperwork for the tenant: deposited under their TAN, reported in their quarterly TDS return, with Form 16A for you.
TDS and GST on commercial rent
If you charge GST on a commercial rent and the invoice shows the GST separately, TDS is worked out on the rent without GST, not on the total.
How much you actually receive
Say a company rents your shop at ₹80,000 a month under section 194-I:
| Amount | |
|---|---|
| Rent | ₹80,000 |
| TDS at 10% | ₹8,000 |
| Paid into your account | ₹72,000 |
Your books should still show ₹80,000 of rent, with ₹8,000 as tax already paid on your behalf. Tracking the rent as "₹72,000 received" makes every month look short by ₹8,000.
Checking the TDS was actually paid
The deduction is only useful to you if the tenant deposits it. Each quarter, check that it appears against your PAN in Form 26AS or the Annual Information Statement (AIS) on the income tax portal. If an amount is missing, ask the tenant for the challan and certificate: you cannot claim credit for TDS that was deducted but never deposited.
How Tenowa handles it
Enter the TDS rate a tenant deducts, whatever it is. Tenowa works it out on the rent only (not on electricity, water or other charges), expects the rent less TDS from the tenant, and totals the TDS in Reports so you can match it against Form 26AS.
Common questions
Does TDS apply to an 11-month agreement for a flat at ₹30,000 a month?
No. Under section 194-IB TDS applies only when the rent is more than ₹50,000 a month.
Is TDS deducted on the security deposit?
Not on a refundable deposit, because it is not rent. If any part of it is adjusted against rent, that part is rent.
Is TDS deducted on maintenance or electricity charges?
TDS applies to rent. Charges billed separately for electricity or water you pass through at cost are generally treated apart from rent; maintenance included in the rent is part of the rent. Check with your accountant for your agreement.
What if my tenant deducted TDS but I cannot see it in Form 26AS?
Ask the tenant for the challan number and the TDS certificate (Form 16C or 16A). Credit only appears once the tenant has deposited the tax and filed the statement.
Tax rules change in the Union Budget. Rates and thresholds here are as of October 2026; confirm with a chartered accountant for your situation.