TDS on rent in India: 2% above ₹50,000 a month

Which law applies

Payments credited or paid on or after 1 April 2026 fall under the Income-tax Act, 2025; earlier ones stay under the Income-tax Act, 1961. The Income Tax Department’s TDS FAQs say rates and thresholds “remain the same under both the Acts”, so the 2% and ₹50,000 figures carry over from section 194-IB. Use the new section numbers in forms and correspondence, with the old ones in brackets only as a pointer.

Who has to deduct

Table serial number 2(i) applies to rent paid by a “person other than specified person”. Under section 402(37), a specified person is:

• anyone who is not an individual or HUF; or
• an individual or HUF whose sales, gross receipts or turnover from business exceeded ₹1 crore, or from a profession exceeded ₹50 lakh, in the preceding tax year.

So an ordinary salaried tenant deducts at 2%. A tenant that is a company, a firm, or an individual above those turnover limits falls in Table 2(ii) instead: 2% for machinery, plant or equipment, and 10% for land, buildings (including factory buildings), furniture or fittings, with the same ₹50,000-a-month threshold.

How much, and when

• Rate: 2% of the rent.
• Threshold: ₹50,000 “for a month or part of a month”. Section 393(1)(a) applies the deduction to the entire amount once the threshold is exceeded.
• Timing: Note 1 to the Table says the tax is deducted at the time of credit of the rent to the landlord’s account or payment, whichever is earlier, “for the last month of the tax year or the last month of tenancy”. In practice, the individual tenant deducts once, in the last month.
• Landlord without a PAN: the section 397(2) rule is the higher of the applicable rate or 20%, but section 397(2)(e) caps the deduction at the rent payable for the last month of the tax year or tenancy.
• TAN: section 397(1)(c)(i) says the requirement to obtain a tax deduction account number does not apply to a person deducting under Table 2(i).

Calculation, using the Table rate: a tenant pays ₹60,000 a month for 12 months. The monthly rent is above ₹50,000. Total rent is ₹7,20,000; 2% of that is ₹14,400, deducted when the last month’s rent is paid or credited. The landlord receives the last month’s rent less ₹14,400, and the tenant pays ₹14,400 to the government. The cap in section 397(2)(e) matters only if the landlord has no PAN.

Form 141, Schedule A

The tenant files Form 141 online (Schedule A for rent paid by an individual or HUF), after logging in with the tenant’s PAN on the e-filing portal. The portal’s user manual says the PAN must be “Active”, that Form 141 “applies only to resident deductees”, and that if the landlord’s PAN is not available the higher rate auto-populates. The FAQs give two time limits:

1. Payment: within 30 days from the end of the month in which the tax is deducted.
2. Filing the challan-cum-statement: within one month from the end of the month in which the tax is deducted.

Corrections are made through the TDS-TRACES portal, and the TDS certificate is downloaded from TRACES. I did not find a penalty or late fee on the pages I read: the form asks for “Interest and Fee amount, if applicable”. Check the current rules on the e-filing portal.

Lower or nil deduction

Section 395(1) lets the payee apply to the Assessing Officer for a certificate of deduction at a lower rate or no deduction. Form 141 has a field for the certificate number. A tenant must follow the certificate while it is valid.

Rent paid to a non-resident landlord

Section 393(1) covers payments “to a resident”. If your landlord is a non-resident (including an NRI who has let a flat in India), Table 2(i) is not the rule. Section 393(2), serial number 17, applies to sums chargeable under the Act paid to a non-resident, at “rates in force”, and Form 141 “applies only to resident deductees”. The 2% and ₹50,000 rules do not carry over. Ask a chartered accountant what rate applies. For the landlord’s side, see NRI rental income tax.

Which professional to consult

A chartered accountant can compute the deduction, file Form 141 and handle the case of a non-resident landlord or a lower-deduction certificate. The registered tenancy terms are a matter for a property lawyer (advocate) enrolled with the State Bar Council: see rent agreement registration.