Answer Book question
If you are an individual or family paying more than ₹50,000 a month to a resident landlord, yes: Section 194-IB requires you to deduct 2% (reduced from 5% in October 2024) once a year, in the last month of the year or of the tenancy, deposit it with Form 26QC within 30 days, and give the landlord Form 16C. No TAN is needed. If your landlord is an NRI, the rule is different and harsher: Section 195 applies to every rupee of rent, at 30% plus cess, with a TAN and Form 27Q, regardless of the amount.
If you are an individual or family paying more than ₹50,000 a month to a resident landlord, yes: Section 194-IB requires you to deduct 2% (reduced from 5% in October 2024) once a year, in the last month of the year or of the tenancy, deposit it with Form 26QC within 30 days, and give the landlord Form 16C. No TAN is needed. If your landlord is an NRI, the rule is different and harsher: Section 195 applies to every rupee of rent, at 30% plus cess, with a TAN and Form 27Q, regardless of the amount.
A doctor renting a house in Pathanamthitta for ₹60,000 a month from a landlord in Muscat pays by transfer to the landlord's NRO account for three years and deducts nothing. The landlord is fine; the tenant is the one the department pursues, as the person who failed to deduct, for 30% of three years' rent plus interest.
Section 194-IB (since June 2017) covers individuals and HUFs not subject to tax audit who pay rent above ₹50,000 a month to a resident. Deduct once, at 2% of the year's rent, in March or in the month the tenancy ends; deposit through Form 26QC using the landlord's PAN; if the landlord does not give a PAN, deduct at 20% but capped at the last month's rent.
Section 195 covers any payment to a non-resident that is chargeable to tax in India; rent on Indian property is, so the tenant must obtain a TAN, deduct at the rate in force (30% plus cess for an individual non-resident, unless the landlord holds a lower-deduction certificate or a treaty rate is certified) and file Form 27Q quarterly. The landlord claims credit when filing an Indian return.
Landlord's residential status this year, in writing; the NRO account is a clue, not proof Monthly rent: above ₹50,000 triggers 194-IB; for an NRI landlord there is no threshold Landlord's PAN Whether the landlord has a Section 197 certificate (reduces the 30%) For NRI landlords, that the rent is paid into an NRO account; NRE is not permitted for rent
Assuming the landlord handles his own tax. Under TDS law the deductor is the one in default. Also: the 194-IB deduction is once a year, not monthly; many tenants over-complicate it.
NRI-owned rental houses are everywhere in Pathanamthitta, Kottayam and the coast. Tenants are almost never told about Section 195. If you are the NRI landlord, tell your tenant in the lease that he must deduct and that you will supply a lower-deduction certificate; it protects him and reduces your cash-flow hit.
Resident landlord, ₹60,000 a month: 2% of ₹7.2 lakh = ₹14,400, deducted in March, deposited by 30 April. NRI landlord, same rent: 30% plus 4% cess on every payment, ₹18,720 a month, or a lower figure if a Section 197 certificate is produced.
Rent below ₹50,000 a month to a resident is outside 194-IB. A business that is subject to tax audit uses Section 194-I instead, with a ₹2.4 lakh annual threshold (raised to ₹6 lakh from April 2025) and 10% on buildings. Check which applies to you.
Get the landlord's status and PAN in writing before the first payment Resident: diarise the March deduction and Form 26QC NRI: obtain TAN; ask for a Section 197 certificate; deduct from the first month
I am buying a flat from an NRI. Do I have to deduct tax? Can I receive ₹2 lakh or more in cash?
Tax & compliance (CA referral)
Income-tax Act, Sections 194-I, 194-IB, 195, 197, 201 · Finance (No. 2) Act 2024 rate change under 194-IB from 1 October 2024 · Income-tax Department e-filing portal, Forms 26QC / 27Q Last checked: 22 August 2026. Rates, limits and whether you may qualify change. Confirm with the official source before you act. Ask Kerala Rising: Use only general, non-identifying facts.
Do not send bank, health, legal, property, identity, account, transaction, or loan documents, screenshots, numbers, OTPs, or passwords over WhatsApp. Kerala Rising can explain public sources and questions to take to the responsible bank, office, or qualified professional. com
This page is general orientation, not personal insurance, investment, medical, legal, lending, tax, employment, or professional advice. Rules, rates, deadlines, and decisions can change. Confirm the current position with the named official source and use a licensed or qualified professional where your situation requires one. Kerala Rising does not decide whether you may qualify, approve claims, or promise an outcome.