Section 194IB – TDS on Rent by Individuals & HUF (No TAN Required) – FY 2025–26 Guide

Many salaried individuals and HUFs pay high monthly rent, especially in metro cities. To bring such transactions into the tax net, the government introduced Section 194IB, which requires TDS on rent paid by individuals or HUFs, even if they are not carrying on business or profession.

This provision is different from Section 194I and is frequently misunderstood.

This WonderTax guide explains:

• When Section 194IB applies

• How TDS is deducted & deposited

• Form 26QC filing process

• Practical examples and common mistakes

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What Is Section 194IB?

Section 194IB mandates deduction of TDS on rent paid for residential property by:

• Individuals

• HUFs

who are not required to deduct TDS under Section 194I.

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Who Is Covered Under Section 194IB?

👉 This section is designed specifically for tenants, not businesses.

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Threshold Limit Under Section 194IB

TDS is applicable if:

• Monthly rent exceeds ₹50,000

It applies even if rent is paid to a resident individual landlord.

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TDS Rate Under Section 194IB

* TDS shall not exceed rent payable for the last month of tenancy.

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When Is TDS Deducted Under Section 194IB?

Unlike other TDS sections:

• TDS is deducted once in a year, not monthly

• Deduction is made:

  • At the time of credit/payment of rent for last month of the financial year, or

  • At the time of termination of tenancy, whichever is earlier

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Example 1: Full-Year Tenancy

• Monthly rent: ₹60,000

• Annual rent: ₹7,20,000

👉 TDS @5% = ₹36,000

Deduction Timing:

• Deduct ₹36,000 from March rent

• Pay net rent of ₹24,000 to landlord for March

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Example 2: Mid-Year Tenancy

• Tenancy period: July to February (8 months)

• Monthly rent: ₹55,000

• Total rent: ₹4,40,000

👉 TDS @5% = ₹22,000

Deduct TDS at tenancy end (February).

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How to Deposit TDS Under Section 194IB

Form 26QC

• Challan-cum-statement Form 26QC must be filed

• Due within 30 days from deduction date

• PAN of tenant & landlord required

👉 No TAN is required.

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Form 16C – TDS Certificate

• Tenant must issue Form 16C to landlord

• Downloadable from TRACES

• Due within 15 days of filing Form 26QC

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GST Impact on Section 194IB

• TDS is deducted on rent amount excluding GST, if GST is shown separately

• If GST is included in rent without bifurcation, TDS may apply on total amount

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Common Mistakes Under Section 194IB

• Deducting TDS monthly instead of once

• Filing Form 26Q instead of 26QC

• Missing Form 16C issuance

• PAN errors leading to higher TDS

• Applying Section 194I incorrectly

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Interest & Penalty for Non-Compliance

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FAQs (Schema-Ready)

Is Section 194IB applicable to office rent?

No. It applies only to residential property.

Do I need TAN to deduct TDS under 194IB?

No. PAN is sufficient.

What if landlord is NRI?

Section 194IB does not apply. Section 195 applies instead.

Can landlord claim TDS credit?

Yes, through Form 26AS/AIS while filing ITR.

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Internal Links (WonderTax)

• TDS on Rent – Compliance Support
  https://wondertax.in/tds-return-filing

• Section 194I vs 194IB Comparison
  https://wondertax.in/tds-on-rent-194ib

• Income Tax Filing for Individuals
  https://wondertax.in/income-tax-filing

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Conclusion

Section 194IB ensures tax compliance even for individual tenants paying high rent. While the rule is simple, procedural mistakes are common and costly.

Timely deduction, correct filing of Form 26QC, and issuance of Form 16C are critical.

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CTA – WonderTax

👉 Paying rent above ₹50,000 per month and confused about TDS?

WonderTax helps with:

• Section 194IB applicability check

• Form 26QC filing

• Form 16C download

• Notice handling & corrections

🔗 https://wondertax.in