TDS on Rent Compliance Service | Savlana Init

TDS Services · TDS on Rent

TDS on Rent — Deducted Correctly. Filed on Time.

TDS on rent under Section 194I and 194IB — correct rate application, timely deposit, Form 26QC or quarterly return filing, and TDS certificate issuance to landlords.

Tax Deducted at Source on rent is governed by two separate provisions of the Income Tax Act, 1961: Section 194I applies to businesses and professionals who pay rent exceeding ₹2.4 lakh per year; Section 194IB applies to individuals and HUFs who pay monthly rent exceeding ₹50,000 but are not required to get their accounts audited. The compliance requirements under each provision are different, and getting them wrong attracts interest, penalty, and TDS default consequences.

Under Section 194I, TDS must be deducted at the time of credit or payment (whichever is earlier), at 10% for land and building and 2% for plant, machinery, or equipment. The deducted tax must be deposited by the 7th of the following month (or 30 April for March deductions) and reported in quarterly Form 26Q returns.

Under Section 194IB, individuals and HUFs must deduct TDS at 5% at the time of payment in the last month of the tenancy or the last month of the financial year, whichever is earlier — and must file Form 26QC within 30 days. A TDS certificate in Form 16C must be issued to the landlord within 15 days of filing. We manage both streams of compliance end to end.

Our TDS on Rent Services

Section 194I Compliance

Computation of TDS, timely deposit, and quarterly Form 26Q return filing for businesses and professionals paying rent above the threshold.

Section 194IB Compliance

TDS computation, deposit, and Form 26QC filing for individuals and HUFs paying monthly rent exceeding ₹50,000.

Rate Determination

Confirmation of the applicable TDS rate based on the type of property (land/building vs plant/machinery) and category of tenant (194I vs 194IB).

Form 26QC Filing

Accurate preparation and timely filing of Form 26QC through the TIN-NSDL portal within the 30-day deadline under Section 194IB.

TDS Certificate Issuance (Form 16C)

Generation and issuance of Form 16C TDS certificate to the landlord from the TRACES portal within the prescribed deadline.

Challan Deposit Management

Computation of the correct challan amount and timely deposit to prevent interest under Section 201(1A).

Correction Statement Filing

Preparation and filing of correction statements for errors in previously filed Form 26Q returns related to rent payments.

Default Resolution

Resolution of TDS defaults — late deduction, late deposit, and late filing — including computation and payment of interest and fees.

Our Process

Lease Agreement Review

We review the lease agreement to determine the type of property, the monthly/annual rent, and the applicable TDS provision (194I or 194IB).

TDS Computation

We compute the TDS amount at the correct rate, considering any lower deduction certificate issued by the landlord.

Challan Deposit

The TDS is deposited via the correct challan (ITNS 281) within the prescribed deadline.

Return or Form 26QC Filing

The TDS is reported in the quarterly Form 26Q return (Section 194I) or Form 26QC (Section 194IB) within the due date.

Certificate Issuance

Form 16A (for 194I) or Form 16C (for 194IB) is generated from TRACES and issued to the landlord.

Why It Matters

✓Correct TDS provision identified (194I vs 194IB)

✓Right TDS rate applied for property type

✓Timely challan deposit prevents interest under Sec 201(1A)

✓Form 26QC filed within 30 days for 194IB compliance

✓Form 16C issued to landlord within the deadline

✓Quarterly 26Q return filed on time for 194I deductors

✓Default resolution and penalty mitigation support

✓Landlord TDS credit correctly reflected in Form 26AS

Frequently Asked Questions

Section 194I applies to any person (other than individuals and HUFs not subject to tax audit) paying rent exceeding ₹2.4 lakh per year. Section 194IB applies specifically to individuals and HUFs (not liable to tax audit) paying monthly rent exceeding ₹50,000. Different rates, deposit deadlines, and forms apply to each.

Under Section 194I, TDS on rent of land, building, or furniture is 10%. Under Section 194IB, the rate is 5%. Under Section 194I, TDS on rent of plant, machinery, or equipment is 2%.

Form 26QC must be filed within 30 days from the end of the month in which the TDS was deducted — i.e., in the last month of the tenancy or the last month of the financial year. Late filing attracts a fee of ₹200 per day under Section 234E.

Yes. TDS obligations are determined by the payer, not the recipient’s tax status. The deductor must deduct and deposit TDS regardless of whether the landlord is exempt. The landlord can claim refund of the TDS when filing their own return.

If the landlord obtains a certificate under Section 197 for nil or lower TDS deduction, the TDS must be deducted at the rate specified in the certificate rather than the standard rate. A copy of the certificate should be retained by the tenant-deductor.

Failure to deduct TDS (or deducting at a lower rate) makes the tenant-deductor liable for the shortfall amount, interest at 1% per month from the date of deductibility to the date of deduction, and 1.5% per month from the date of deduction to the date of deposit. The expense may also be disallowed under Section 40(a)(ia) in the tenant’s income tax computation.

Paying rent above the TDS threshold?

Let us identify the right provision, compute the TDS, deposit it on time, file the return, and issue the certificate — full compliance, no defaults.