TDS on Rent for FY 2026–27: What Section 393 of the New Income-tax Act Means for You

A practical, guide to the revised rent TDS rules under the Income-tax Act, 2025

If you're paying rent for an office, a shop, a warehouse, or even a flat you've taken for business use, there's a good chance you've heard whispers about changes to TDS on rent. With the Income-tax Act, 2025 now in effect, the old Section 194-I has been replaced by Section 393, and while the core idea  deduct tax before you pay rent  hasn't changed, several of the details have. New form numbers, a friendlier rate for individuals, and a couple of payment codes you'll need to get right.

Let's walk through what's actually changed and what you need to do about it, without wading through the bare legal text.

Who Needs to Deduct TDS on Rent?

The law splits deductors into two broad buckets, and which one you fall into decides your threshold, your rate, and your paperwork.

1. Specified Persons — Companies, Firms, LLPs, AOPs/BOIs, and Tax-Audited Individuals/HUFs

If your business falls into this category, the rule is simple: once monthly rent to a single landlord crosses ₹50,000  even for part of a month  TDS kicks in. And here's where it gets slightly technical: the rate depends on what you're actually renting.

• Plant, Machinery & Equipment: 2% TDS (Payment Code 1008)
• Land, Building, Furniture & Fittings: 10% TDS (Payment Code 1009)

Unlike the individual category below, this isn't a once-a-year affair. You deduct at the time of credit or payment, whichever happens first, and this needs to happen every single month the rent is paid or credited.

2. Individuals & HUFs Not Liable to Tax Audit

This is where the new law is genuinely kinder than before. If you're an individual or HUF renting a property but you weren't liable for tax audit in the previous financial year, here's your situation:

• Threshold: Still ₹50,000 per month or part thereof
• Rate: Down to 2% (it used to be 5% under the old Section 194-IB)

The bigger relief, though, is timing. You don't need to deduct TDS every month. It's a one-time deduction  done either in March (the last month of the financial year) or in the last month of the tenancy, whichever comes first  calculated on the total rent paid during that period.

3. Rent Paid to Non-Resident (NRI) Landlords

If your landlord is an NRI, forget the ₹50,000 threshold  it doesn't apply here. TDS is deducted from the very first rupee, governed by Section 393(2), the equivalent of the earlier Section 195.

• Rate: 30% plus applicable surcharge and 4% Health & Education Cess, or the beneficial DTAA rate whichever works out more favourably and is actually applicable in your case
• Reporting: Form 27Q filed quarterly, Payment Code 1053

Also keep in mind that Form 15CA and Form 15CB may be required for the remittance, depending on your specific situation, so it's worth checking this before you make the payment rather than after.

New Forms You Need to Know

One of the more visible changes under Section 393 is the paperwork itself. The familiar Form 26QC has been replaced.

For individuals and HUFs using the PAN-based route, there's no need to obtain a TAN Form 141 has to be filed within 30 days from the end of the month in which TDS was deducted, and Form 16C goes to the landlord after that.

Due Dates You Shouldn't Miss

A Few Things That Can Trip You Up

• PAN verification matters. Always obtain and verify your landlord's PAN. Skipping this could mean TDS at a higher rate.
• Lower/Nil deduction certificates exist. If your landlord is eligible, a Section 197 certificate can reduce or eliminate the TDS burden worth exploring for high-value leases.
• Penalties are real and layered. Late deduction attracts 1% interest per month, late deposit 1.5% per month, plus a late filing fee of ₹200/day (capped at the TDS amount), and possible disallowance of the rent expense itself in your books.
• Reconciliation isn't optional. The TDS you deduct shows up in your landlord's AIS and Form 26AS. Mismatches lead to notices  both for you and them  so keep your records tight.
• Keep your paperwork. Rent agreements, payment proofs, PAN copies, and challans should all be filed away safely for whenever assessment or verification comes calling.

The Bottom Line

Section 393 hasn't reinvented rent TDS  it's tidied it up. A lower rate for individuals, a single unified threshold, new form numbers to remember, and the same old discipline required around deadlines and documentation. If you're paying rent above ₹50,000 a month for business or professional purposes, this is the time to check which bucket you fall into and get your process in order before the compliance calendar catches up with you.