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TDS on Rent: What You Need to Know |
What is TDS on Rent?
TDS on rent is a tax that is deducted at source by the landlord from the rent paid to the tenant. The TDS is then paid to the government by the landlord.
Who is Liable to Deduct TDS on Rent?
Any person who pays rent of ₹2.40 lakh or more in a year to any other person is liable to deduct TDS on rent.
How to Deduct TDS on Rent?
The landlord can deduct TDS on rent by using Form 26QC. This form can be downloaded from the Income Tax Department website.
What are the Penalties for Not Deducting TDS on Rent?
If a landlord fails to deduct TDS on rent, they may be liable to a penalty of up to 200% of the tax that should have been deducted.
How Can Tenants Claim TDS on Rent?
Tenants can claim TDS on rent by filing their income tax return. The TDS will be shown in Form 26AS.
Additional Changes to TDS on Rent in Union Budget 2025-26
In addition to increasing the annual limit for TDS on rent, the Union Budget 2025-26 has also proposed that two self-occupied properties can be valued at 'nil' for tax purposes. This means that if you own two self-occupied properties, you will not have to pay any income tax on the rental income from those properties.
The FM also announced that there will be no income tax payable up to 12 lakh under new income tax regime for salaried class. This means that if your salary is less than ₹12 lakh, you will not have to pay any income tax.
Conclusion
The Union Budget 2025-26 has made some significant changes to the TDS on rent rules. It is important for landlords and tenants to be aware of these changes so that they can comply with the law.