New TDS Rate on Rent 2024: What Changed?
The new TDS rate on rent from 1st October 2024 is now 2% (reduced from 5%) for monthly payments exceeding ₹50,000 under Section 194-IB.
This change impacts salaried individuals, tenants, and those filing Form 26QC.
Let’s break it down.
What is Section 194-IB?
Provide Form 16C to landlord
Applies to individuals or HUFs not subject to tax audit
Deduct TDS if rent paid > ₹50,000/month
File Form 26QC (within 30 days of payment)
New TDS Rate from 1st Oct 2024
| Period of Rent Payment | TDS Rate | Remarks |
|---|---|---|
| April 2024 – Sep 2024 | 5% | Pre-amendment rate |
| Oct 2024 – Mar 2025 | 2% | New reduced rate |
| Full FY 2024–25 (Annual) | 2% | If entire rent paid after Oct |
Source: Budget 2024 announcement + CBDT Circular No. 4/2024
Common Mistake in Form 26QC
Many tenants are still deducting 5% TDS in March 2025 for full-year rent—even though the effective rate is 2%.
🔹 If you deducted 5%, you can claim refund in next ITR
🔹 Make sure to verify TDS credit in Form 26AS
Who Should Deduct TDS?
- Tenants paying rent > ₹50,000/month
- Only for residential property
- You don’t need a TAN, just your PAN
Steps to File Form 26QC
- Visit TIN NSDL website
- Enter PANs of tenant and landlord
- Mention amount and date of payment
- Pay TDS online via e-challan
- Download and issue Form 16C
Don’t Ignore TDS on Rent
Failing to deduct or deposit TDS can attract:
- Interest under Section 201(1A)
- Penalty under Section 271H
Always file Form 26QC within 30 days to avoid late fees and legal trouble.
Legal Angle
- Budget 2024 reduced rate to 2% w.e.f 01.10.2024
- Refer CBDT Circular No. 4/2024
- Section 194-IB inserted by Finance Act, 2017
- Non-compliance can lead to disallowance under Section 40(a)(ia) for business payers