Published 19 October 2026
Whether a tenant must deduct tax from rent depends on who the tenant is, as much as on how much the rent is. A company renting an office, a doctor renting a clinic and a salaried employee renting a flat can each pay Rs 60,000 a month and still face three different rules. The rate, the timing, whether a TAN is needed, and which form is filed all differ. The thresholds changed in 2024 and 2025, and from 1 April 2026 both regimes moved into a single table in the Income-tax Act, 2025. This guide sets out who deducts, at what rate and threshold for each year, and the forms and dates that follow.
Which Act applies
The date on which the rent is paid or credited decides the Act.
| Up to 31 March 2026 (1961 Act) | From 1 April 2026 (2025 Act) | |
|---|---|---|
| Tenants other than individuals and HUFs, and individuals or HUFs above the business or professional turnover limit | Section 194-I | Section 393(1) [Table: Sl. No. 2(ii)], “specified person” |
| Other individuals and HUFs | Section 194-IB | Section 393(1) [Table: Sl. No. 2(i)], “person other than specified person” |
| Landlord is a non-resident | Section 195 | Section 393(2) [Table: Sl. No. 17] |
A “specified person” is any person other than an individual or HUF. It also covers an individual or HUF whose business turnover exceeded Rs 1 crore, or professional receipts exceeded Rs 50 lakh, in the year immediately preceding the year of payment (section 402(37)). The second proviso to section 194-I drew the same line for the 1961 Act, by reference to the preceding financial year.
Thresholds and rates, year by year
Section 194-I and Sl. No. 2(ii): specified persons.
| Period | Threshold | Rate |
|---|---|---|
| FY 2019-20 to FY 2024-25 | Rent credited or paid to the payee in the financial year exceeds Rs 2,40,000 in aggregate (first proviso to section 194-I, as it stood before 1 April 2025) | 2 per cent for machinery, plant or equipment; 10 per cent for land, building, furniture or fittings |
| FY 2025-26 | Rent “for a month or part of a month” to the payee exceeds Rs 50,000 (first proviso, substituted by the Finance Act, 2025 from 1 April 2025) | Same |
| Tax year 2026-27 onwards | Rs 50,000 “for a month or part of a month” (Sl. No. 2(ii), column D) | Same |
Section 194-IB and Sl. No. 2(i): other individuals and HUFs.
| Period | Threshold | Rate |
|---|---|---|
| Up to 30 September 2024 | Rent exceeds Rs 50,000 for a month or part of a month | 5 per cent |
| 1 October 2024 to 31 March 2026 | Same | 2 per cent (substituted for “five” by the Finance (No. 2) Act, 2024) |
| Tax year 2026-27 onwards | Rs 50,000 for a month or part of a month (Sl. No. 2(i)) | 2 per cent |
When to deduct. Under section 194-I and Sl. No. 2(ii), tax is deducted at the earlier of credit and payment, month by month. Under section 194-IB and Sl. No. 2(i), it is deducted once a year: at the time of credit or payment “for the last month of the previous year or the last month of tenancy”, whichever comes first (section 194-IB(2); Note 1 to Sl. No. 2). A salaried tenant paying Rs 60,000 a month from April to March deducts 2 per cent of Rs 7.2 lakh, that is Rs 14,400, from the March rent.
No PAN. Tax is deducted at 20 per cent or the higher rate under section 206AA or section 397(2). For an individual or HUF tenant under section 194-IB or Sl. No. 2(i), the deduction cannot exceed the rent for the last month (section 194-IB(4); section 397(2)(e)).
What counts as rent
For section 194-I, “rent” is any payment “under any lease, sub-lease, tenancy or any other agreement or arrangement” for the use of land, building, land appurtenant to a building, machinery, plant, equipment, furniture or fittings, “whether or not any or all of the above are owned by the payee”. This is the Explanation to section 194-I; section 402(29) carries the same definition for the 2025 Act. For section 194-IB the definition is narrower: only land or building or both. Rent paid to a real estate investment trust for an asset it owns directly is excluded (third proviso to section 194-I; section 393(4) [Table: Sl. No. 2]).
The breadth of “any other agreement or arrangement” has limits. In Japan Airlines Co Ltd v CIT (Supreme Court, 4 August 2015, Civil Appeal No. 9875 of 2013), Japan Airlines and Singapore Airlines paid the Airports Authority of India landing and parking charges and deducted tax at 2 per cent as payments to contractors. The Revenue said the charges were rent for the use of land, at the then 20 per cent rate. The Delhi and Madras High Courts had disagreed. The Supreme Court accepted that the second limb of the definition gives “rent” a “very wide connotation”. But it held that the charges were, in substance, for the safety, navigation and other facilities the Authority provides. “Use of the land” was “only minor and insignificant”, so the charges were not rent. The Delhi High Court’s contrary decisions were overruled.
TAN, forms and due dates
| Step | Section 194-I / Sl. No. 2(ii) | Section 194-IB / Sl. No. 2(i) |
|---|---|---|
| TAN | Required (section 203A; section 397(1)(a)) | Not required (section 194-IB(3); section 397(1)©(i)) |
| Deposit | By the 7th of the next month; by 30 April for March (rule 30(2), 1962 Rules; rule 218(2), 2026 Rules) | Within 30 days from the end of the month of deduction (rule 30(2B); rule 218(3)) |
| Statement | Quarterly Form 26Q; Form No. 140 from tax year 2026-27 | Challan-cum-statement Form 26QC (rule 31A(4B)); Form No. 141 (rule 219(5)) |
| Statement due | 31 July, 31 October, 31 January, 31 May (rule 31A; rule 219(4)) | With the payment, within the same 30 days |
| Certificate | Form 16A; Form No. 131, within 15 days of the statement due date (rule 215) | Form 16C within 15 days of the Form 26QC due date (rule 31(3B)); Form No. 132 within 15 days of the Form No. 141 due date |
A landlord who is non-resident falls outside both entries, which apply only to payments “to a resident”. The tenant deducts under section 195 or section 393(2) [Table: Sl. No. 17] at the rates in force. For a non-resident Indian under Part II of the First Schedule to the Finance Act, 2026, that means 30 per cent on “the whole of the other income”, plus surcharge and cess. There is no monthly threshold. The tenant needs a TAN and files Form 27Q or Form No. 144, and Form 15CA/15CB or Form No. 145/146 applies before remitting (see Buying Property from a Non-Resident and Paying a Non-Resident: Forms 15CA and 15CB). The portal’s e-Pay Tax FAQ says that Forms 26QB, 26QC, 26QD and 26QE “are only available to Resident Deductees”.
What to have ready
- The tenant’s PAN. For section 194-I, also the TAN.
- The landlord’s PAN, name, address and residential status. Where there are several landlords, record each one’s share of the rent.
- The lease or leave and licence agreement, with the start date, monthly rent, and any deposit or advance rent.
- The property address and type.
- For a specified person: the previous year’s turnover or gross receipts, to confirm whether section 194-I or Sl. No. 2(ii) applies.
Portal steps for the individual tenant
The e-filing portal’s “Create Challan Form (CRN)” user manual describes Form 26QC as a post-login service on the e-filing portal:
- Log in with the tenant’s PAN. Choose e-File, then e-Pay Tax, then New Payment, then the tile “26QC (TDS on Rent of Property)”.
- On the Add Tenant Details page, enter the tenant’s details.
- On the Add Landlord Details page, enter the landlord’s residential status, PAN, name, address and contact details.
- On the Add Property Rented Details page, enter the type and address of the property and the agreement details.
- Pay electronically. The receipt is then available under Payment History.
The manual adds that “For multiple tenants / landlords, multiple 26QC forms are required to be filled”, and that if the landlord’s PAN is not known, a higher rate may apply. For rent paid from 1 April 2026 the same information goes into Form No. 141 (see Deducting and Depositing TDS). Tenants under section 194-I use the TAN-based challan and quarterly statement described in that guide and in Quarterly TDS and TCS Statements.
Signing. Form 26QC and Form No. 141 are submitted from the tenant’s own logged-in account and completed by payment. The quarterly statement is verified as explained in the quarterly statements guide.
Late deduction, late payment and other defaults
- Interest. Interest is charged at 1 per cent a month for late or no deduction and 1.5 per cent a month for late payment after deduction (section 201(1A); section 398(3)).
- Late fee. A fee of Rs 200 a day is charged for a late statement or challan-cum-statement, capped at the tax deductible (section 234E; section 427).
- Penalty. A penalty of Rs 10,000 to Rs 1,00,000 may be levied for failure to file or for incorrect information (section 271H; section 461).
- Disallowance. A business or professional tenant who fails to deduct or pay loses 30 per cent of the rent as a deduction until the tax is paid (section 40(a)(ia); section 35(b)(i)).
- Assessee in default. The tenant is in default unless the landlord has returned the rent and paid the tax and an accountant certifies this (section 201(1) proviso; section 398(2)).
What can be changed after filing
Wrong PANs, amounts, periods or section codes are corrected by a correction statement, or a correction of the challan-cum-statement, as described in Correction Statements and TRACES Defaults. An individual tenant who should have used section 194-IB but filed nothing must pay the tax with interest and file the late challan-cum-statement. The fee under section 234E or section 427 runs until it is filed.
Summary
- Classify the tenant. A specified person (any non-individual, or an individual or HUF above the Rs 1 crore or Rs 50 lakh turnover limit) falls under section 194-I or Sl. No. 2(ii). Other individuals and HUFs fall under section 194-IB or Sl. No. 2(i).
- Check the landlord’s residential status. A non-resident landlord takes the case to section 195 or Sl. No. 17, at the rates in force, with a TAN.
- Apply the threshold for the year. Under section 194-I, this was Rs 2,40,000 a year up to FY 2024-25 and Rs 50,000 a month from FY 2025-26. Under section 194-IB and Sl. No. 2(i), it is Rs 50,000 a month.
- Deduct 2 or 10 per cent month by month under section 194-I or Sl. No. 2(ii). Under section 194-IB or Sl. No. 2(i), deduct once, from the last month’s rent, at 5 per cent up to 30 September 2024 and 2 per cent since.
- Deposit and report: by the 7th with a quarterly Form 26Q or Form No. 140 for specified persons, or within 30 days through Form 26QC or Form No. 141 for other individuals.
- Issue Form 16A or Form No. 131, or Form 16C or Form No. 132, within 15 days of the statement due date.
This completes the property set. Joint, Inherited and Gifted Property covers rent from jointly owned property, which each co-owner reports by share.