Section 393 of Income Tax Act 2025
Entry at Sr. No. 2(i) of Table at Section 393(1) of Income Tax Act 2025 provides for TDS on Rental of Property where Rent is paid by Individual or a HUF.
Rent means any payment for land and/or building under any lease, sub-lease, tenancy or any other arrangement.
Recipient of the Rent can be owner or any other person. TDS to be deducted for the person who is receiving the rent under any agreement.
TDS to be deducted where such Rent exceeds Rs 50000/- per month.
Rate of TDS = 2% of the rent paid
This entry is specifically for those Individuals/HUFs who are paying rent for any residential/commercial or any other premises for more than Rs 50000/- and using the premises where :-
- If they are doing business with turnover of more than Rs 1 Crore in preceding tax year, the premises are used for any purpose other than said business; or
- If they are professionals with Gross Receipts of more than Rs 50 Lakh in preceding tax year, the premises are used for any purpose other than said profession;
- in any other case, for any purpose including business/profession, residential, commercial, factory, etc.. Some examples for these cases are: –
- a person earning salary
- a person dealing in capital goods and earning capital gains
- a person earning rental income from self owned assets
- a person earning interest income/dividend income
- a person doing business or profession with turnover/receipts upto Rs 1crore/50 Lakh
- a person doing business/profession in its first year having turnover/receipts more than Rs 1crore/50 Lakh and opting exemption for non -compliance of regular provisions of TDS.
Timing for Deduction and Deposit of TDS
This case of TDS on Rental of Immovable property has a unique timelines regarding its deduction and deposit to government exchequer.
Timing for TDS deduction:
- TDS to be deducted from rent for the last month of a Tax Year in case such rent is paid for the last month of said tax year (i.e. Rent for the March month in general).
- Where tenancy ends before last month of tax year, TDS to be deducted from rent to be paid for last month of such tenancy.
Example
- Tenancy period: 1 July 2025 to 31 December 2025
- Monthly rent: ₹60,000
- TDS rate applicable: 2%
Since tenancy ends in December, TDS is deducted for whole of Tenancy Period in one go, on the rent for December 2025.
TDS = 2% x (60000×6)
In the same case, if tenancy not ends in December and being continue, TDS to be deducted from the rent of March 2026 @ 2% x (60000×9)
- TDS on Rent to be deducted once in a year;
- TDS to be deducted at the rate applicable as on date of deduction (i.e. last month of tenancy or tax year whichever is earlier)
- TDS to be deposited at once through Income Tax Portal
- TDS to be deposited through PAN. Here, TAN number not required.
- Form 26QC as return cum challan statement available on Income Tax Portal to file the return and payment of Tax
PAN Aadhar Verification
PAN Aadhar Verification is a significant important step to check whether PAN of seller is active or inactive. It may be possible that PAN is active for Income Tax Portal purposes, however, it may be inactive for TDS purposes (as per Traces Portal).
- The Income Tax Department has made PAN–Aadhaar linking mandatory;
- If the payee’s PAN is not linked to Aadhaar, it becomes inoperative;
- An inoperative PAN is treated as if the payee has no PAN.
- This can be checked on the Income Tax Department’s portal where PAN–Aadhaar linking status is available
In case, PAN and Aadhar are not linked, TDS to be deducted at 20% instead of 2%.
It is the duty of payer of Rent of property to verify the PAN Aadhar linking status of seller before making payment of TDS. In case, he pays TDS @2%, the department will ask additional 18% from payer where payee’s PAN founds to be inactive on the day of payment of TDS.
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Our associate consultants specialize in a range of business areas. These include strategic planning, issues resolution, culture assessment, board effectiveness, retention.
Our associate consultants specialize in a range of business areas. These include strategic planning, issues resolution, culture assessment, board effectiveness, retention.