TDS on Rent 2026: NRI & Resident Owners and Tenants Guide

TDS on Rent in India (2026): A Separate Guide for NRI Owners, Resident Owners, Resident Tenants and NRI Tenants

Short version: The TDS rule on rent depends on who is paying and who is receiving. Rent paid to an NRI owner has TDS at about 31.2% from the first rupee. Rent paid to a resident owner by an individual or HUF tenant has 2% TDS, once a year, only if rent is above Rs 50,000 a month. A company or firm tenant deducts 10%. The tenant is the one who deducts and deposits, so tenants carry the risk if it’s done wrong.

TDS isn’t an extra cost. It’s advance income tax taken from the rent and paid to the government, and the owner claims credit for it when filing their return. The details change with each combination of owner and tenant, so we’ve explained each separately. Find your case below.

Note: from 1 April 2026, the Income-tax Act, 2025 replaced the 1961 Act, and the TDS rules now sit in Section 393. Section and form numbers below use the familiar names, but some have changed, so check the Income Tax portal for the current form names.

Which rule applies to me?

Section 1: For NRI property owners

What applies. Section 195 applies to rent paid to a non-resident. There’s no minimum threshold: TDS applies from the first rupee of rent, however small.

The rate. The base rate is 30%, plus 4% health and education cess, which makes 31.2%. Surcharge can apply at higher incomes, and a double tax avoidance agreement (DTAA) may reduce the rate. Your CA can tell you which applies.

Who deducts and how.

• The tenant deducts TDS from each month’s rent and pays the rest to your NRO account.

• The tenant deposits the TDS with the government by the 7th of the following month, using their TAN (tax deduction account number).

• The tenant files a quarterly TDS statement for payments to non-residents (Form 27Q, renumbered in the new rules). Quarterly due dates are 31 July, 31 October, 31 January and 31 May.

• You get Form 16A as the TDS certificate.

Example. Rent is Rs 85,000 a month. TDS at 31.2% is Rs 26,520, and you receive Rs 58,480. Over a year, TDS is Rs 3,18,240.

What you do.

• Tell your tenant in writing that you’re an NRI, so the correct rate is applied.

• Keep your NRO account and PAN details up to date.

• File your Indian income tax return each year (typically ITR-2 if you have no business income) and claim credit for the TDS. If 31.2% is more than your actual Indian tax, you can claim a refund.

• If your tax is likely to be lower, you can apply to the tax officer for a lower deduction certificate so the tenant deducts less.

Sending the money abroad. Rent lands in your NRO account. From there you can remit up to USD 1 million a year with your CA’s certificate and the usual forms.

If it goes wrong. If the tenant deducts at a lower rate or doesn’t deduct at all, the tax department can raise a demand, and you may face a demand later too.

Section 2: For resident Indian property owners

For a resident owner, the rule depends on who your tenant is.

If your tenant is an individual or HUF (the usual case for a flat)

What applies. Section 194-IB applies when the tenant is an individual or HUF who isn’t subject to a tax audit, and rent is above Rs 50,000 a month. It’s a monthly test. If rent in any month is above Rs 50,000, TDS applies for the year. Rent of exactly Rs 50,000 does not trigger it.

The rate. 2% of the rent.

How it works.

• The tenant deducts the TDS once a year, from the March rent (or the last month of the tenancy, if that comes earlier), on the total rent for the year.

• The tenant deposits it within 30 days of the end of that month, with Form 26QC. No TAN is needed, only PAN.

• You receive Form 16C.

Example. Rent is Rs 60,000 a month for the whole year. Total rent is Rs 7,20,000, so TDS is Rs 14,400, deducted from March’s rent.

No TDS. If rent is Rs 50,000 or less in every month, or Rs 40,000 a month, there’s no TDS.

What you do. Give your tenant your PAN. Claim credit for the TDS in your return, using Form 16C and your tax statement (26AS/AIS). If you don’t provide a PAN, the tenant must deduct at a higher rate (20%, capped at the last month’s rent).

If your tenant is a company, firm or audit-liable person

What applies. Section 194-I applies when rent is above Rs 50,000 a month.

The rate. 10% on land and buildings.

How it works. The tenant deducts at the time of payment or credit, deposits by the 7th of the following month with their TAN, and files a quarterly statement (Form 26Q, renumbered in the new rules). You receive Form 16A.

Example. Rent of Rs 80,000 a month means TDS of Rs 8,000 a month.

Section 3: For Indian (resident) tenants

You’re the one who deducts and deposits, so your own compliance matters. What you do depends on who your owner is and who you are.

Paying rent to a resident owner, and you’re an individual or HUF

• When: if rent is above Rs 50,000 a month.

• Rate: 2%, deducted once, from March rent or your last month’s rent.

• Pay: within 30 days of the end of that month, with Form 26QC. You need your PAN and your owner’s PAN. No TAN.

• Certificate: give your owner Form 16C.

• If you vacate mid-year: deduct from your last month’s rent, not later.

Paying rent to a resident owner, and you’re a company, firm or audit-liable

• When: rent above Rs 50,000 a month.

• Rate: 10% on land and buildings.

• Pay: by the 7th of the following month with your TAN, and file the quarterly statement.

• Certificate: issue Form 16A.

Paying rent to an NRI owner

• Section 195 applies, whatever the amount. You need a TAN.

• Rate: about 31.2% (30% plus cess, and surcharge if applicable), or a lower rate if your owner has a lower deduction certificate.

• Monthly: deduct from each month’s rent and deposit by the 7th of the next month.

• Quarterly: file the statement for payments to non-residents, with due dates of 31 July, 31 October, 31 January and 31 May.

• Certificate: issue Form 16A to your owner.

• Don’t take a landlord’s word. If an NRI owner tells you not to deduct, the liability still falls on you for the shortfall, interest and penalties. The Budget’s PAN-only relief for property purchases from NRI sellers, which we’ve covered elsewhere, doesn’t cover rent as far as I found, so confirm with your CA.

After you vacate. You still have to deposit all TDS for the months you occupied the property and file the final return.

Section 4: For NRI tenants

Being an NRI doesn’t exempt you from TDS on rent paid in India. The rules follow the same logic, so check with your CA before you rely on this section.

Paying rent to a resident owner

• If you’re an individual or HUF: Section 194-IB looks at who you pay (a resident) and doesn’t restrict the payer’s residence. On my reading, you deduct 2% on rent above Rs 50,000 a month, once, from March rent or your last month’s rent, and pay with Form 26QC.

• You need a PAN, and so does your owner. Pay the challan from an Indian bank account, which can be harder to arrange from abroad, so set this up early.

• If you rent through a company, the company’s rules apply: 10% under Section 194-I.

Paying rent to an NRI owner

• Section 195 applies from the first rupee. You need a TAN.

• Rate: about 31.2%, or a lower rate with a lower deduction certificate.

• Deposit and file: monthly by the 7th and quarterly statements, as in Section 3.

Practical points for NRI tenants

• Obtain your PAN, and a TAN if your owner is an NRI, before the first rent payment.

• Agree in writing who pays the owner’s net rent and into which account.

• Ask your property manager to track deadlines. A missed one is your liability.

What are the penalties for getting it wrong?

These fall on the person who should have deducted, usually the tenant:

Section numbers have changed under the new Act, so ask your CA for the current references.

Quick answers (FAQ)

Is TDS on rent 10% or 2%?
It depends. An individual or HUF tenant pays 2% under Section 194-IB (for rent above Rs 50,000 a month). A company or firm tenant pays 10% under Section 194-I.

Is there a minimum for TDS on rent to an NRI?
No. Section 195 applies from the first rupee.

Does my rent of Rs 40,000 a month attract TDS?
Not under Section 194-IB or 194-I, because it’s below the Rs 50,000 monthly threshold. If your owner is an NRI, TDS applies regardless.

When does an individual tenant deduct TDS?
Once a year, in March, or in the last month of the tenancy if it ends earlier.

Do I need a TAN to deduct TDS on rent?
Not for Section 194-IB. You do for rent paid to an NRI owner, or if you’re a company or firm.

What is the TDS on rent to an NRI?
About 31.2% (30% plus cess), plus surcharge if applicable, unless a lower rate applies.

Can an NRI owner reduce the TDS?
Yes, by applying to the tax officer for a lower deduction certificate before the tenant deducts.

Who is liable if TDS isn’t deducted?
The tenant, for the shortfall, interest and penalties. The owner may also face a demand.

Disclaimer: This guide has been prepared by FRPM with reference to publicly available online sources including the Income Tax Act, 1961, the Income-Tax Act, 2025, CBDT circulars, and the Income Tax Department's official resources (incometax.gov.in). While every effort has been made to ensure accuracy, tax laws, provisions, forms, rates, and deadlines are subject to change without notice. This document is for general informational purposes only and does not constitute legal, tax, or financial advice. For advice specific to your situation, call us on 9164555100 and schedule a consultation with our empanelled Chartered Accountant.