Revised TDS on Rent Rules Effective from 1st April 2025: What You Need to Know
The Income Tax Department has revised the TDS provisions on rent payments, effective 1st April 2025, bringing some significant changes that landlords and tenants—especially businesses and individuals paying high rent—need to take note of.
📌 Key Highlights of the TDS on Rent Changes (Effective FY 2025-26)
✅ Threshold Limit Remains the Same
- The ₹2.4 lakh per annum threshold for individuals/HUFs not under tax audit remains unchanged under Section 194-IB.
✅ Revised TDS Rate
- TDS on rent exceeding ₹50,000 per month continues to be deducted at 5%.
However, clarified procedures now apply to:
- Multiple tenants/owners
- Shared properties
- Rent paid via digital platforms or aggregators
✅ New Compliance Measures Introduced
- PAN of the landlord is mandatory; in its absence, TDS at 20% will apply
- One-time deduction and deposit of TDS by individuals (not liable for audit) must be done in the last month of the financial year or in the month of vacating the property
- Form 26QC (TDS on rent) and Form 16C (TDS certificate) must be filed and issued within 30 days
🧾 Who is Required to Deduct TDS?
| Payer Type | Applicability |
|---|---|
| Individual/HUF (not audited) | If rent exceeds ₹50,000/month (Sec 194-IB) |
| Any person other than individual/HUF | If annual rent > ₹2.4 lakh (Sec 194-I) |
🚨 Common Scenarios That Need Attention
- 🏘️ Shared Property: Each tenant must deduct TDS proportionately
- 🧾 Advance Rent: TDS must be deducted at the time of payment
- 🔁 Lease Renewal: TDS must be recalculated and adjusted for changes in rent\
- 🧑💼 Co-working Spaces or Commercial Rentals: Businesses must deduct TDS under Section 194-I if applicable
💼 ThinkBizFilings Can Help You Stay Compliant
Avoid notices or penalties due to incorrect TDS deductions on rent. Our team of tax professionals at ThinkBizFilings can assist with:
- TDS computation and deduction
- Filing Form 26QC & Form 16C
- PAN verification for landlords
- Year-end compliance and audit support
