TDS on rent 2026: the Rs 50,000 line, 2% rate, and Form 141

Short answer: An individual or HUF tenant must deduct TDS on rent only when rent for a month, or part of a month, exceeds ₹50,000. The rate is 2%, not 5% — it was cut with effect from 1 October 2024. The tenant needs no TAN, deducts once a year in March or in the last month of the tenancy, and files a challan-cum-statement within 30 days. From 1 April 2026 that statement is Form 141 under the Income-tax Act, 2025; Form 26QC and Form 16C are gone. A business tenant is different — it deducts 10% on building rent, every month.

₹50,000Monthly rent thresholdper month or part of a month
2%Rate for an individual tenantdown from 5% since Oct 2024
10%Rate a business tenant deductson land, building, furniture
141The form that replaced 26QCfrom 1 April 2026

Most Tricity landlords will let property their whole life without a rupee of TDS being deducted. A 2BHK in Zirakpur at ₹16,000, a 1BHK in Kharar at ₹10,000, a PG bed at ₹7,500 — none come near the ₹50,000 line. Where it does bite is narrower: a kothi in an inner Chandigarh sector, a company-leased flat for an IT Park or Mohali Phase 8B executive, a shop or clinic, an office in Industrial Area, or a whole building leased to a PG operator. There the tenant has a duty that has nothing to do with your rent agreement, and if the tenant gets it wrong, the person who loses money is you.

Plenty of Tricity renters and owners now find flats and area information through local real estate pages and creators on Instagram — useful for spotting stock, no use at all for a question like this one.

The two rules, split by who your tenant is

India runs two rules for TDS on rent, divided by who the tenant is rather than what the property is. This is the thing most landlords get muddled.

TDS on rent in FY 2026–27: individual tenant versus business tenant
	Individual or HUF tenant, not tax-audited	Company, firm or tax-audited tenant
Old section (1961 Act)	194-IB	194-I
From 1 April 2026	Section 393, Income-tax Act, 2025	Section 393, Income-tax Act, 2025
Threshold	Rent above ₹50,000 for a month or part of a month	Rent above ₹50,000 for a month or part of a month
Rate on land or building rent	2%	10%
Rate on plant and machinery	Not applicable	2%
Landlord has no PAN	20%, capped at the last month’s rent	20%
TAN needed?	No — PAN of both sides is enough	Yes
How often deducted	Once a year: March, or the last month of tenancy	Every month, at payment or credit
Filing	Form 141 challan-cum-statement	Quarterly return, Form 26Q

A salaried tenant paying ₹70,000 for a kothi deducts ₹1,400 a month in effect, but pays the year’s deduction in one go in March. A company leasing the same kothi as a guest house deducts ₹7,000 a month from month one. Same house, same rent, five times the deduction, purely because of who signed the lease.

The change that quietly took small commercial landlords out of the net

Until 31 March 2025, Section 194-I tested an annual figure of ₹2,40,000 — only ₹20,000 a month. A Sector 22 shop at ₹30,000 crossed it easily and had 10% deducted every month. The Finance Act 2025 replaced that with a monthly ₹50,000 test from 1 April 2025, moving the trigger from ₹20,000 a month to ₹50,000. A lot of small commercial landlords in Chandigarh, Mohali Phase 7 and Zirakpur stopped having TDS deducted at all. If your tenant company is still deducting 10% on a ₹35,000 shop rent in 2026, they are working off an old chart.

The flip side matters: because the test is monthly, one heavy month pulls you in. A lease billed at ₹48,000 plus a separate ₹6,000 charge that is really rent by another name crosses ₹50,000 that month, and TDS then applies to the full month’s rent, not just the excess.

If your tenant deducts 2% and never files the challan-cum-statement, the deduction never appears against your PAN in Form 26AS or the AIS. You have received 98% of the rent and, on the department’s records, paid no advance tax. Ask for the filing acknowledgement in writing, in the same month the deduction happens.

What a landlord actually loses when the tenant does not file

This is the only part of TDS on rent that costs a landlord real money. The tenant deducts ₹1,400 from ₹70,000 and pays you ₹68,600. You declare ₹70,000 and set the ₹1,400 off against your liability — but only if the money reached the government under your PAN.

If it did not, your 26AS shows no credit, your return is processed with a shortfall or a smaller refund, and you are chasing a former tenant to file a form they gain nothing from. Section 205 of the Income-tax Act does bar a direct demand on you to the extent tax was deducted from your income, whether or not the deductor deposited it — but the system runs on what is visible in 26AS, so relying on it means correspondence with the department and usually a chartered accountant. Preventing the problem costs one message; fixing it costs a professional fee.

Confirm who your tenant is, on paperIndividual, HUF, proprietorship, company or partnership. The rate turns on this, not on the property.
Give your PAN in writing at signingNo PAN means 20% instead of 2%. Put it in the agreement.
Agree the deduction month upfrontAn individual tenant deducts in March, or in the final month if they vacate mid-year. Write the expected figure in so the short payment is not a surprise.
Collect the Form 141 acknowledgementDue within 30 days from the end of the month of deduction. No acknowledgement, no credit.
Check 26AS and the AIS in June, not DecemberWhile the tenant is still contactable. Ask for the Form 132 certificate that replaced Form 16C.

Form 26QC is now Form 141, and Form 16C is now Form 132

The Income-tax Act, 2025 took effect on 1 April 2026 and replaced the 1961 Act. Almost all TDS other than salary now sits under Section 393. The old PAN-based challan-cum-statements — 26QB for property purchase, 26QC for rent, 26QD for contractors, 26QE for virtual digital assets — are merged into one Form 141, filed on the income tax portal through PAN login. The certificate the tenant hands over is now Form 132, which absorbed Forms 16B, 16C, 16D and 16E.

The mechanics are unchanged: tax must reach the government within 30 days from the end of the month of deduction, and Form 141 goes with it. This is worth knowing because most search results and most templates still say 26QC. If a tenant tells you in late 2026 that they are filing 26QC, they are reading last year’s guide.

The ₹50,000 test is per tenant and per landlord, not per flat

Joint owners. If a flat owned equally by a husband and wife is let at ₹90,000 a month, the rent attributable to each owner is ₹45,000. Neither crosses ₹50,000, so an individual tenant may have no deduction duty at all — provided the ownership shares are real and documented in the agreement, not invented at return-filing time.

Flatmates. A 3BHK near IT Park or in Sector 70 Mohali let at ₹60,000 to three professionals who each pay ₹20,000 under one agreement naming all three is different from one tenant paying ₹60,000 and collecting from the others. In the first case nobody crosses the line; in the second, the paying tenant does. The paperwork decides it.

TDS is likely in play

A kothi in an inner Chandigarh sector let above ₹50,000 a month
A shop, showroom, clinic or office let to a business above ₹50,000
A company-leased flat for staff, at 10% once the monthly line is crossed
A whole building leased to a PG or co-living operator
Any rent paid to a non-resident owner, from the first rupee

TDS almost certainly does not apply

A 1BHK or 2BHK in Kharar, Zirakpur, Mohali or Panchkula at ordinary rent
A PG bed or a single room let directly to a student or working tenant
A jointly owned flat where each owner’s share stays under ₹50,000
Flatmates each paying under ₹50,000 under one agreement naming them all
A shop at ₹35,000, which the 2025 threshold change took out of the net

PGs, and non-resident owners

A PG bed attracts no TDS. A student paying ₹8,000 a month in Kharar or Sector 15 Chandigarh is nowhere near the threshold. Hoomzz lists physically verified PG accommodation and rentals across Chandigarh, Mohali, Panchkula, Zirakpur and Kharar, and the great majority of that stock sits far below ₹50,000 a month. The building behind the PG is a different question: where an owner leases a whole house or floor to an operator running it as a business, the operator is a tax-audited tenant and rent above ₹50,000 attracts 10%. Ask the operator which section they are deducting under before the first month’s rent, not after March.

Rent paid to a non-resident owner sits outside all of this, under Section 195 of the old Act and now Section 393(2): no threshold, 30% plus cess, and the tenant needs a TAN. That is the biggest practical problem for owners letting from abroad, and it is worked through in the guide to managing a Kharar rental from far away, with the ownership chain in the NRI guide to buying property in Tricity.

What this does to your yield

Nothing, and that is the point people miss. TDS is not a tax on rent — it is the same income tax you owe anyway, collected earlier and by someone else, and 2% against a marginal rate of 30% is an advance, not a cost. What genuinely moves your return is vacancy, maintenance and the gap between advertised and banked yield, worked through in the rental yield by area study for Tricity, with the arithmetic in the Hoomzz calculators. If the paperwork is your worry, the tenant verification and rent agreement guide for Chandigarh and Mohali is the one to read next: separately from tax, police verification of tenants is mandatory in Chandigarh and SAS Nagar district under standing District Magistrate preventive orders, and that duty sits with the landlord.

Hoomzz is a zero-brokerage marketplace with physically verified listings, and does not provide tax, legal, filing or eviction services. Nothing here is advice on your own case — on joint-ownership splits and anything involving a non-resident owner especially, a chartered accountant or an advocate signs off, not a portal. Owners can list at the Hoomzz listing form.

Frequently asked questions

At what rent does a tenant have to deduct TDS in India?

An individual or HUF tenant must deduct TDS only when rent exceeds ₹50,000 for a month or part of a month. A business or tax-audited tenant faces the same ₹50,000 monthly threshold, which replaced the older ₹2,40,000 annual test from 1 April 2025. Once the line is crossed, TDS applies to the full rent for that month, not only to the amount above ₹50,000.

What is the TDS rate on rent under Section 194-IB now?

The rate is 2%, reduced from 5% with effect from 1 October 2024. It applies to individual and HUF tenants not liable to tax audit who pay a resident landlord more than ₹50,000 a month. If the landlord supplies no PAN the rate rises to 20%, capped at the last month’s rent, and for tax events from 1 April 2026 the provision sits in Section 393 of the Income-tax Act, 2025.

Does a tenant need a TAN to deduct TDS on rent?

An individual or HUF tenant deducting on residential rent does not need a TAN. The PAN of both sides is enough, and the challan-cum-statement is filed through PAN login on the income tax portal. A business tenant deducting under the old Section 194-I rules does need a TAN, as does any tenant paying rent to a non-resident landlord.

What is Form 26QC and who files it?

Form 26QC was the challan-cum-statement an individual or HUF tenant filed when deducting TDS on rent above ₹50,000 a month. From 1 April 2026 it has been replaced by Form 141 under the Income-tax Act, 2025, which also absorbed Forms 26QB, 26QD and 26QE. The tenant files it, not the landlord, within 30 days from the end of the month in which the tax was deducted.

How does a landlord claim TDS the tenant has already deducted?

The landlord declares the gross rent as income and claims the deducted amount as a credit in the return. That credit is only available if the tenant deposited the tax and filed the statement, because the claim is matched against Form 26AS and the AIS. Ask the tenant for the Form 141 acknowledgement and the Form 132 certificate that replaced Form 16C, and check 26AS before filing rather than after.

Does TDS apply to a PG or a shared flat rent?

Almost never on a PG bed, because individual PG rents in the Tricity sit far below the ₹50,000 monthly threshold. Shared flats depend on the paperwork: if three flatmates each pay under ₹50,000 under one agreement naming all of them, nobody crosses the line, but if one tenant pays the whole ₹60,000 and recovers from the others, that tenant must deduct. Where an owner leases an entire building to a PG operator, the operator is a business tenant and the 10% rule applies above ₹50,000 a month.

Sources, and what here is judgement rather than data

Measured fact: every rate, threshold, date, form number and deadline above — the ₹50,000 monthly test, the 2% and 10% rates, the 20% no-PAN rate, the 1 April 2025 threshold change, the 30-day deadline, and the 2026 move to Form 141 and Form 132.

Judgement, not data: that most Tricity residential rentals sit below the threshold, and that inner-sector kothis and company-leased flats are where the line is crossed. Both rest on asking prices in live listings, not transaction records. That many small Chandigarh and Mohali shop landlords left the TDS net after the 2025 change is an inference from the arithmetic, not a counted figure, as is the advice to collect the acknowledgement in the month of deduction. Left out deliberately: GST on commercial rent, advance tax, and security deposits adjusted against rent — each needs a professional looking at the actual agreement.

👈 This comparison is based on market observations and publicly available data. Users should verify details independently.

TDS on rent in 2026: the Rs 50,000 line, the 2% rate, and why Form 26QC is now Form 141