Rent is one of the few payments where an ordinary tenant can be responsible for deducting TDS — not just companies. Two sections govern it, and Budget 2025 rewrote the threshold from an annual figure to a clean ₹50,000 per month. Which section applies depends entirely on who is paying.
194-I vs 194-IB: Which One Applies to You?
| Feature | 194-I | 194-IB |
|---|---|---|
| Who deducts | Companies, firms, anyone under tax audit | Individuals / HUF not under audit |
| Threshold | ₹50,000 / month | ₹50,000 / month |
| Rate | 10% (2% plant/mach.) | 2% |
| How often | Every month | Once a year |
| TAN needed? | Yes | No |
| Form | 26Q / 16A | 26QC / 16C |
In short: if you're a salaried person or small family renting a home or office and not under tax audit, you're under 194-IB — the simpler 2%, once-a-year, no-TAN route.
What Changed in Budget 2025
- 194-I threshold moved from ₹2,40,000 per year to ₹50,000 per month. The monthly framing aligns it with 194-IB.
- The 194-IB rate was already cut from 5% to 2% with effect from 1 October 2024 — so for the whole of FY 2025-26 it is 2%.
- If your monthly rent is ₹50,000 or below, no TDS applies under either section.
How a Tenant Deducts TDS (194-IB)
Say you pay ₹70,000/month rent on a flat. You are an individual, not under audit, so 194-IB applies:
Monthly rent₹70,000
Above ₹50,000/month?Yes → TDS applies
Annual rent (₹70,000 × 12)₹8,40,000
TDS @ 2% (once a year)₹16,800
Paid to landlord₹8,23,200
- Deduct the full year's TDS in March, or in the last month of tenancy if you move out earlier.
- File Form 26QC online within 30 days of the end of that month — your PAN and the landlord's PAN are enough, no TAN.
- Download and hand Form 16C to your landlord as proof.
- If the landlord hasn't given a PAN, deduct 20% — but it's capped at the last month's rent.
Work out rent TDS in one click
Pick 194-I or 194-IB, enter the monthly rent, and see the annual TDS instantly.
Open TDS Calculator →Common Pitfalls
- Forgetting it's your job as tenant — under 194-IB the liability is on the person paying rent, not the landlord.
- Missing Form 26QC — late filing attracts ₹200/day under Section 234E, capped at the TDS amount.
- Confusing the sections — using 194-I (10%) when you're an individual who should use 194-IB (2%).
- Rent split between co-owners — the ₹50,000/month test still looks at the total rent for the property.
Frequently Asked Questions
What is the TDS limit on rent in 2025-26?
From Budget 2025, TDS under Section 194-I applies when rent exceeds ₹50,000 per month (earlier ₹2,40,000 per year). For individuals/HUF under 194-IB the limit is also ₹50,000 per month.
What's the difference between 194-I and 194-IB?
194-I applies to companies, firms and those under tax audit — 10% (or 2% for plant/machinery), deducted monthly, TAN required. 194-IB applies to ordinary individuals/HUF — just 2%, once a year, via Form 26QC, no TAN.
What is the TDS rate on rent for individuals?
Under 194-IB it is 2% (reduced from 5% with effect from 1 October 2024), deducted once a year on the total annual rent in March or the last month of tenancy.
How does a tenant deposit TDS on rent?
An individual tenant files Form 26QC online (no TAN needed) within 30 days of the end of the month in which TDS is deducted, and gives Form 16C to the landlord. Companies/firms use a TAN, deposit monthly by the 7th, and file Form 26Q.
Is TDS on rent deducted every month?
Under 194-I (companies/firms) yes, every month rent is paid or credited. Under 194-IB (individuals) only once a year — on the last month's rent — applied to the whole year's rent.