ITR Filing: Tenants paying over Rs 50,000 rent must check this TDS requirement

Individuals and HUFs not liable for tax audit must deduct TDS on rent paid to a resident landlord if the monthly rent exceeds Rs 50,000. Once this threshold is crossed, TDS applies to the entire rent amount, not just the excess portion.

The applicable TDS rate is 2% of the rent amount payable to a resident landlord. Unlike many other TDS provisions, tenants are not required to deduct tax every month. TDS is deducted in the last month of the financial year or the last month of tenancy, whichever is earlier.

If a tenant pays Rs 70,000 per month from April 2025 to March 2026:
● Total annual rent: Rs 8.40 lakh
● TDS at 2%: Rs 16,800
The TDS should be deducted in March 2026 and deposited with the government by April 30, 2026.

Tenants do not need a TAN for this compliance, as it is PAN-based.
● For deductions up to March 31, 2026: File Form 26QC followed by issuance of Form 16C
● For deductions on or after April 1, 2026: Challan-cum-statement is Form 141, and the corresponding certificate is Form 132

The tax must be deposited within 30 days from the end of the month in which TDS is deducted.

After depositing TDS, tenants must issue Form 16C to the landlord. For deductions on or after April 1, 2026, the corresponding certificate will be Form 132. This document helps landlords claim TDS credit while filing ITR and serves as proof of compliance for tenants.

If the tenancy continues throughout the financial year, March becomes the default month for TDS deduction. The tenant should deduct TDS in March, deposit it by April 30, and complete all filing and certificate-related formalities within the prescribed timelines.

Failure to comply can result in the tenant being treated as an assessee in default. The consequences may include:
● 1% interest per month for non-deduction of TDS
● 1.5% interest per month for non-payment after deduction