Renting property in India? If you wrongly deducted 5% TDS instead of 2% in FY 2024-25, you’re not alone.
What is the TDS Rate on Rent for FY 2024-25?
The applicable TDS rates depend on who is paying and how much rent is being paid:
| Tenant Type | Monthly Rent | TDS Rate | Section |
|---|---|---|---|
| Individual/HUF (not in tax audit) | ₹50,000 or more | 5% | Section 194-IB |
| Individual/HUF (business under tax audit) | Any amount | 10% | Section 194-I |
| Company, Partnership, LLP, etc. | Any amount | 10% | Section 194-I |
Why Some Paid 5% Instead of 2%?
In FY 2023-24, government employees and certain sectors received reduced TDS rates (2%) during pandemic relief phases.
⚡ That concession has ended.
For FY 2024-25, it’s standard 5% for eligible individual tenants under Section 194-IB.
Mistaken 2% deductions today can cause shortfall notices later
Common Mistakes Leading to Overpayment
- Wrong rate selection while filing Form 26QC (TDS on Rent form).
- Confusion with older fiscal rules (COVID relaxations).
- Mix-up between Section 194-I and 194-IB applicability.
How to Claim TDS Refund for Overpaid Rent via TRACES
If you paid 5% instead of 2% (or wrongly deducted), here’s how you can fix it:
Step-by-Step Process:
- Login to TRACES:
Visit TRACES Portal and login using your PAN credentials. - Refund Request:
- Fill Form 26B (Refund request form).
- Submit digitally via DSC or EVC.
Government Clarifications
- CBDT Circular No. 3/2020 clarified TDS rates applicable post-COVID reliefs.