Under the new tax framework, the provisions for TDS on Rent have been consolidated under Section 393(1). The rules differ depending on whether the tenant is an ordinary individual or a business entity.

1.TDS on Rent ; For Individuals & HUFs (Non-Business Cases)

This applies to salaried employees or other individuals paying rent for their residence who are not liable for a tax audit.

• When to Deduct: You must deduct TDS only if the rent exceeds ₹ 50,000 per month or part of a month.
• TDS Rate: 2%.
• When to Deduct (Timing): You do not need to deduct tax every month. It is a one-time deduction:
  • At the time of credit/payment for the last month of the tax year (March); or
  • At the time of credit/payment for the last month of tenancy (if you vacate the property during the year).
• How to Pay:
  • You must file Form No. 141 (Challan-cum-statement).
  • Deadline: The tax must be deposited within 30 days from the end of the month in which the deduction is made,.
  • Note: You do not need a TAN (Tax Deduction Account Number) for this. You can use your PAN.

2.TDS on Rent ; For Businesses (“Specified Persons”)

This applies to companies, firms, and individuals whose accounts are audited.

• Threshold Limit: TDS applies if the aggregate rent paid exceeds ₹ 50,000 per month or part of a month.
• TDS Rates:
  • 2% for the use of Machinery, Plant, or Equipment.
  • 10% for the use of Land, Building (including factory), Furniture, or Fittings.
• Compliance:
  • Payment Deadline: Generally by the 7th of the next month (for March, by 30th April).
  • Return Form: File quarterly statement in Form No. 140.

3. Important Safeguards & Rules

• No PAN Penalty: If the landlord does not provide a PAN, the TDS rate increases to 20%. However, for Individuals/HUFs (Case 1 above), the deduction amount cannot exceed the rent payable for the last month. This protects the tenant from paying more tax than the rent due,.
• How Landlords Can Avoid TDS:
  • Landlords can submit Form No. 121 (which replaces Forms 15G/15H) to the tenant to receive rent without TDS.
  • Condition: The landlord’s total income must be below the taxable limit, or (for Senior Citizens) the final tax liability must be Nil,.

Summary Table

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