TDS on rent calculator — Section 194-IB

Section 194-IB: the rule that makes tenants deductors

Since 2017, the Income Tax Act has drafted high-rent tenants into the tax collection system. Section 194-IB applies to individuals and HUFs (those not under tax audit) paying a resident landlord more than ₹50,000 per month: the tenant must deduct tax from the rent and deposit it against the landlord's PAN. The design is deliberately lightweight compared to business TDS — no TAN registration, no quarterly returns, no monthly deductions. Instead, one deduction in the final month of the financial year (or the final month of tenancy, if you vacate mid-year), covering the entire year's rent, deposited through a single challan-cum-statement: Form 26QC, within 30 days of the month of deduction. The landlord receives Form 16C from you as the certificate, and the amount appears in their Form 26AS as tax already paid on their behalf.

The rate is the detail most of the internet still gets wrong: it was 5% for years, and the Finance (No. 2) Act 2024 cut it to 2% for rent credited on or after 1 October 2024. Because 194-IB deducts in the year's last month, the rate follows that final credit's date — which, for any tenancy running today, means 2% on the full year's rent. (If the landlord hasn't shared a PAN, Section 206AA pushes the rate to 20%, capped so the deduction never exceeds the final month's rent — one more reason PAN exchange belongs in the rent agreement, not the last week of March.)

Worked example — the arithmetic in one paragraph

Rent of ₹60,000 a month for a full financial year: annual rent ₹7,20,000; TDS at 2% is ₹14,400, deducted once from March's payment. The landlord receives ₹45,600 that month instead of ₹60,000 — not a loss but a prepayment of their own tax, visible in their 26AS and adjustable against their final liability at filing. Vacate mid-year — say after 8 months — and the deduction happens in month 8 on ₹4,80,000 of rent: ₹9,600. The calculator above runs your numbers and the PAN-missing scenario; what it deliberately doesn't do is pretend to be advice, because edge cases (multiple landlords on one agreement, rent revisions mid-year, NRI landlords — see below) genuinely change the answer.

The boundaries: 194-I, 195 and where 194-IB stops

Businesses deduct under a different section. Companies, firms and audited individuals paying rent fall under Section 194-I — different thresholds, monthly deduction discipline, TAN and quarterly returns; the 194-IB simplifications exist precisely because salaried tenants couldn't reasonably run that machinery. NRI landlords change everything: payments to non-resident landlords fall under Section 195 — TDS at rates the tenant must determine (often much higher), TAN required, and 194-IB's simplifications unavailable. If your landlord is an NRI, treat this page as background and take professional advice; it is the most expensive edge case to get wrong. Joint tenancies and joint landlords divide the ₹50,000 test in ways that turn on the agreement's drafting — another verify-with-a-CA case. This calculator handles the common case honestly and names its edges, which is more than most of the internet does for this section.

Compliance hygiene for both sides of the agreement

Tenants: the practical checklist is short — collect the landlord's PAN at agreement time; diarise the final-month deduction; file Form 26QC within 30 days (late filing accrues fees under 234E and interest on late deposit); download and hand over Form 16C. Miss the deduction entirely and the interest and fee exposure sits with you, not the landlord — the section's one genuinely sharp edge for forgetful tenants.

Landlords: insist on Form 16C and check the credit lands in your 26AS before filing season; a tenant who deducted but never deposited is your problem to chase before it becomes your notice to answer. For landlords running multiple tenancies, deduction certificates, rent revisions and deposit reconciliations are precisely the paperwork that outgrows memory — which is where EstateDeck's tenant and lease management keeps agreements, PANs, rent schedules and receipts against each unit, and property accounting keeps the rent ledger the 26AS entries must reconcile with. The related arithmetic on the tenancy's other side — deposits and their interest — has its own free calculator, and the rental yield calculator answers the landlord's pricing question the same browser-only way.

A note on accuracy: this is general information, not tax advice. Rates, thresholds and forms change with Finance Acts — the 2% rate itself is recent — and individual facts (NRI status, audit applicability, joint arrangements) change the section that applies. Confirm your case with a chartered accountant or the Income Tax Department's published guidance before deducting or filing.