Many tenants presume that if a property’s monthly rent exceeds ₹50,000, they must deduct TDS (Tax Deducted at Source). This is true, but when a property is jointly owned, the ₹50,000 threshold applies per co‑owner’s share, not on the total rent.
What are the legal sections involved?
In accordance with Section 194IB of the Income Tax Act, 1961 and its corresponding Section 393 of the Income Tax Act, 2025, an individual or a Hindu Undivided Family (HUF), who is not otherwise liable to , must deduct TDS at 2% if the monthly rent paid to a landlord exceeds ₹50,000. The TDS rate was 5% before 1 October, 2024.
For example, if an individual owner receives rent of ₹50,000 or more per month from a let-out property, the tenant is liable to deduct 2% TDS from the rent payable to the owner.
The key point here is that the ₹50,000 threshold applies to each landlord (payee), not to the total rent of the property. For example, if a property has two or more joint owners and the rent is distributed among them, the amount received by each owner determines whether TDS is applicable. The complete is explained in the following table.
Understanding the rule with examples
|
Total Monthly Rent |
Rent Received by Each Owner |
Is TDS Applicable? |
Reason |
|---|---|---|---|
| ₹80,000 | ₹40,000 + ₹40,000 | No | Each owner receives less than ₹50,000. |
| ₹1,20,000 | ₹60,000 + ₹60,000 | Yes | Each owner receives more than ₹50,000. |
| ₹90,000 | ₹55,000 + ₹35,000 | Yes, for the ₹55,000 payment | Only one owner’s share exceeds ₹50,000. |
Note: These are illustrative examples. For complete clarity on your tax liability, you should consult a certified legal advisor and a tax planner before making any decisions. Professional guidance is a must in such cases.
The law also clarifies that tax is generally deducted from the rent payable for the March of the or the last month of the tenancy. Especially, in cases when the rental agreement ends before the end of March.
For tenants, this clarification and distinction are critical because TDS compliance depends on the amount payable to each co-owner rather than the property’s aggregate rent. If one simply adds the total rent and compares this with ₹50,000, the limit can result in unnecessary or compliance-related complications.
Hence, when a rented property is jointly owned, the tenant should first discuss and determine each owner’s share of the rent. In case the monthly payment to an individual owner is less than ₹50,000, TDS under Section 194IB of the and Section 393 of the Income Tax Act, 2025, is ordinarily not required to be paid, even if the property’s total monthly rent is above the ₹50,000 threshold.
Finally, before making such decisions, consult certified tax planners and legal experts.
Disclaimer: This article is for educational purposes only and does not constitute legal or tax advice. Readers should consult a qualified tax professional or legal expert for personalised guidance before making any compliance decisions.