TDS on Rent Limit FY 2026-27: Who Deducts, When, How Much

Search for the TDS limit on rent and you will find three different answers: ₹2.4 lakh a year, ₹6 lakh a year, and a monthly figure. Part of the confusion is timing. The limit was raised by Budget 2025, and from 1 April 2026 the whole TDS chapter moved from the Income-tax Act, 1961 to the new Income-tax Act, 2025. Sections 194-I and 194-IB no longer exist under those numbers; rent TDS now sits in section 393(1), Table serial number 2.

The rule for tax year 2026-27, in one table

Serial 2(i), rent paid by a person who is NOT a 'specified person' (typically a salaried tenant): 2%, but only if the rent is above the monthly threshold.
Serial 2(ii), rent paid by a 'specified person' (a company, firm, or a business above a turnover limit): 10% for land, buildings, furniture or fittings; 2% for machinery, plant or equipment. Same monthly threshold.
The threshold in both cases is written per month, 'for a month or part of a month', not per year.

Source: Income-tax Act, 2025, section 393 (TDS table), Income Tax Department

Check how much of your rent you can claim as HRA

Are you a 'specified person'?

This one definition decides whether you deduct 2% once a year or 10% every month. Under section 402(37) of the new Act, a specified person is:

Any person that is not an individual or a Hindu undivided family: companies, firms, LLPs, trusts and so on.
An individual or HUF whose business turnover was above ₹1 crore, or professional receipts above ₹50 lakh, in the previous tax year.

A salaried person renting a flat is almost never a specified person. A doctor or a CA with a busy practice renting their clinic or office may well be.

Source: Income-tax Act, 2025, section 402 (definitions), Income Tax Department

Worked example: a salaried tenant

Priya, salaried, pays ₹55,000 a month for a flat in Mumbai, all 12 months of tax year 2026-27. That is above ₹50,000 a month, so TDS applies at 2%. She does not deduct every month: for a non-specified person, the law says tax is deducted once, in the last month of the tax year (or the last month of the tenancy, if she moves out earlier). On ₹6,60,000 of rent, 2% is ₹13,200. So in March 2027 she pays her landlord ₹41,800 instead of ₹55,000, and deposits the ₹13,200 with the government. A tenant paying ₹45,000 a month (₹5.4 lakh in the year) deducts nothing.

Worked example: a business tenant

A private limited company rents an office for ₹60,000 a month. A company is always a specified person, so it deducts 10% for a building: ₹6,000 every month, at the time the rent is credited or paid, whichever comes first. The landlord receives ₹54,000 a month and sees the ₹6,000 as tax already paid on their behalf.

How a tenant deposits the TDS

Individuals and HUFs who are not specified persons deposit rent TDS through a challan-cum-statement in Form No. 141 (the form that replaced Form 26QC and its siblings).
Due date: within 30 days from the end of the month in which the tax was deducted. For a March deduction, that means by 30 April.
You need the landlord's PAN. Keep the rent agreement and payment proof together with the Form 141 acknowledgement.
After depositing, give the landlord the TDS certificate, so they can match the credit in their tax records.

Source: Income-tax Rules, Rule 218 (Form No. 141, 30-day deadline), Income Tax Department

Three mistakes that cost tenants money

Reading the limit as yearly. The threshold is monthly. ₹45,000 a month never crosses it, even though it adds up to ₹5.4 lakh a year.
Deducting every month when you are a salaried tenant. You deduct once, in the last month. Monthly deductions are for specified persons.
Ignoring it because the landlord 'files their own taxes'. The duty to deduct is the tenant's. Missing it can bring interest and a demand on you, not the landlord.

If your landlord is a non-resident (an NRI who owns the flat), none of this applies. Payments to non-residents fall under a different part of section 393, with no ₹50,000-style monthly threshold. Check that case separately before you pay.

Does this affect your HRA claim?

No. HRA exemption depends on your salary, the rent you pay and your city, not on whether TDS was deducted. But if you pay more than ₹1 lakh in rent a year, your employer will ask for the landlord's PAN for the HRA claim anyway, so the details you need for TDS are ones you already have. HRA is only available in the old tax regime.

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Frequently asked questions

What is the TDS limit on rent for FY 2026-27?: Under section 393(1) of the Income-tax Act, 2025, TDS on rent applies when the rent exceeds ₹50,000 for a month or part of a month. The threshold is monthly for both individual tenants and businesses.
What is the TDS rate on rent paid by a salaried person?: 2%, deducted once in the last month of the tax year or the last month of the tenancy, on the rent for the whole period, if the monthly rent exceeds ₹50,000.
What happened to sections 194-I and 194-IB?: From 1 April 2026 they were replaced by section 393(1) of the Income-tax Act, 2025, Table serial number 2. Payments made before 1 April 2026 still follow the old sections.
Is TDS on rent 2% or 10%?: 2% if a non-specified person (usually a salaried individual) pays the rent, or for machinery and equipment. 10% if a specified person, such as a company or a large business, pays rent for land, a building, furniture or fittings.
Which form does a tenant use to deposit TDS on rent?: Form No. 141, a challan-cum-statement, within 30 days from the end of the month in which the tax was deducted. It replaced Form 26QC.

Educational content, not financial advice. Figures are illustrative and based on the rules current at the time of writing; verify specifics with a qualified advisor.