21 Apr Paying Rent Above ₹50,000? Know Your TDS Deduction & Form 26QC Rules
Are you an individual paying monthly rent above ₹50,000? Whether you’re a salaried employee, freelancer, or running a small business—you are required to deduct 2% TDS on your rent under Section 194-IB of the Income Tax Act.
🧾 What is Section 194-IB?
Introduced in 2017, Section 194-IB mandates that:
- If any individual or HUF (not liable to audit under Section 44AB)
- Pays monthly rent exceeding ₹50,000
- To a resident landlord
Then, the tenant must:
✅ Deduct 2% TDS on the total rent amount
✅ Deposit the TDS using Form 26QC
✅ Issue Form 16C (TDS certificate) to the landlord
📅 When to Deduct TDS?
There are two ways to comply:
Monthly Deduction & Filing
- Deduct 2% TDS every month
- File Form 26QC every month
Annual Deduction & Filing (Simplified Option)
- Deduct the entire 2% TDS on total rent in March
- File Form 26QC once by 30th April
This second option is ideal for salaried individuals and others who prefer simpler annual compliance.
❗ What If You Don’t Deduct TDS?
If you fail to deduct or deposit TDS:
- You may receive an income tax notice
- Be liable to pay interest, late fees, and penalties
- Your landlord may face issues in their ITR
It’s a small step that can help avoid big trouble.
📌 Common Myths
❌ “I’m not claiming HRA, so this doesn’t apply to me.”
✔ Wrong! This rule applies regardless of HRA. Even if you don’t claim HRA in your ITR, you still need to deduct TDS if your rent is over ₹50,000.
❌ “Only landlords need to worry about TDS.”
✔ Wrong again. Tenants are responsible for deducting and filing TDS under Section 194-IB.
✅ Quick Checklist for Tenants
- Paying rent above ₹50,000/month? ✅
- Deduct 5% TDS once in March ✅
- File Form 26QC by 30th April ✅
- Download & issue Form 16C to landlord ✅
- Ensure it reflects in your ITR filing ✅
We are AMFI Registered Mutual Funds Distributors & Top Tax Consultants based out of Thane