Paying Rent Above ₹50,000? Then How to Deduct TDS Under Section 194-IB (One-Time, Not Monthly)

Paying Rent Above ₹50,000? 

Paying Rent Above ₹50,000? Paying monthly house rent of more than ₹50,000? Then you need to know about Section 194-IB of the Income Tax Act, 1961. Introduced by the Government of India to ensure high-value rental transactions are brought under the tax net, this provision makes it mandatory for tenants to deduct TDS (Tax Deducted at Source) on rent.

But don’t worry—you don’t have to deduct TDS every month. Let’s break down what you need to do and when, so you can stay compliant with ease.

📘 What is Section 194-IB?

Paying Rent Above ₹50,000? Then How to Deduct TDS Under Section 194-IB (One-Time, Not Monthly) Section 194-IB applies to individuals or Hindu Undivided Families (HUFs) who are not required to get their books of account audited under Section 44AB, but are paying monthly rent exceeding ₹50,000 to a resident landlord.

This section requires the tenant to deduct TDS at a flat rate of 5% from the total annual rent, but only once a year.

🔗 Source: Income Tax Department – Section 194-IB

👤 Who Should Deduct TDS?

You must deduct TDS under Section 194-IB if:

• You are an individual or HUF (not liable to tax audit under Section 44AB).
• You are paying monthly rent more than ₹50,000.
• You are paying rent to a resident Indian landlord.

Note: If you’re a business or professional subject to tax audit, Section 194-I applies instead.

❌ Who is Exempt?

TDS under Section 194-IB is not applicable if:

• Monthly rent is ₹50,000 or less.
• You are paying rent to a non-resident (covered under Section 195).
• You are covered under tax audit provisions (then Section 194-I applies).

📆 When to Deduct TDS?

You are required to deduct TDS only once a year:

At the time of payment or credit of rent for March, or the last month of tenancy if vacated earlier.

This one-time compliance is a major relief compared to monthly deductions required under other sections.

💰 TDS Rate and Calculation

🧾 Example:

Suppose you pay ₹60,000/month as rent:

• Annual rent = ₹60,000 × 12 = ₹7,20,000
• TDS = 5% of ₹7,20,000 = ₹36,000
  You’ll deduct this ₹36,000 from the rent of March or when you vacate, and deposit it accordingly.

📄 Forms and Deadlines

📌 Where to File:

• File Form 26QC online at:
  🔗 TIN-NSDL Portal
• Download and issue Form 16C from:
  🔗 TRACES Portal

⚠️ What If You Miss the Deadline?

Non-compliance can result in:

• Interest under Section 201(1A).
• Late fee under Section 234E: ₹200 per day.
• Penalty under Section 271H: Up to ₹1 lakh for failure to furnish Form 26QC/16C.

So it’s critical to adhere to the deadlines.

✅ Quick Compliance Checklist

• Check if your monthly rent > ₹50,000.
• Confirm landlord is a resident and has a valid PAN.
• Deduct 5% TDS on total annual rent at year-end or before vacating.
• File Form 26QC within 30 days of deduction.
• Provide Form 16C to the landlord within 15 days.

🎯 Why Section 194-IB?

The government introduced Section 194-IB to:

• Bring high-value rentals under the tax net.
• Improve tax compliance from landlords.
• Reduce monthly compliance burden for salaried individuals.

📝 Final Thoughts

Paying rent above ₹50,000/month?
Yes, you need to deduct TDS—but only once a year. With just two forms and one-time deduction, Section 194-IB makes tax compliance simple and hassle-free.

📌 Official Resources & Help

• 🔗 Income Tax Department: FAQs on TDS on Rent
• 🔗 Form 26QC Filing – TIN-NSDL
• 🔗 Form 16C Download – TRACES Portal

Stay informed. Stay compliant. Rent smart.
Want a downloadable checklist or infographic? Let me know!

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