Tenants and buyers are sometimes required to deduct tax at source. Individuals and HUFs who are not liable to tax audit and pay rent of more than ₹50,000 a month must deduct TDS at 2% under Section 194-IB. The tax is deducted once, from the rent for the last month of the year or of the tenancy, and deposited through challan-cum-statement Form 26QC without a TAN.
Other tenants, such as businesses liable to tax audit, deduct TDS under Section 194-I where rent exceeds ₹50,000 for a month or part of a month: 2% for plant and machinery and 10% for land, building or furniture.
A buyer of immovable property (other than agricultural land) from a resident seller must deduct 1% TDS under Section 194-IA where the consideration is ₹50 lakh or more, and deposit it through Form 26QB. Where the seller is an NRI, Section 195 applies instead.
Key points
- Section 194-IB: 2% for rent above ₹50,000 a month, by individuals and HUFs not under audit
- Section 194-I: 2% or 10%, above ₹50,000 a month or part of a month
- Section 194-IA: 1% on property purchases of ₹50 lakh or more from a resident
- Give the payee Form 16C or 16B as applicable
- Buying from an NRI: TDS under Section 195, and a TAN is needed
General information only, not professional advice. Section references are to the Income-tax Act, 1961; corresponding provisions of the Income-tax Act, 2025 apply from 1 April 2026. Thresholds and dates may change by notification.
