TDS on Rent in FY 2026-27: How Section 393 Replaced 194-I and 194-IB

The ₹50,000 monthly test

This is the point most commentary still gets wrong. The old ₹2.4 lakh annual threshold under 194-I was replaced by a ₹50,000 per month or part of a month test, and that monthly test has carried into Section 393 for both categories.

Two consequences follow. A tenancy that starts mid-month still counts that part-month as a full month for the threshold. And a rent of exactly ₹50,000 is below the trigger — the obligation arises when rent exceeds ₹50,000 for a month.

Forms: 26QC is now Form 141

The unified challan-cum-statement under Section 393(3) is Form 141. It replaces four old forms at once: 26QB (purchase of immovable property), 26QC (rent), 26QD (contractor and professional payments by individuals) and 26QE (virtual digital assets). One form, one workflow, applicable to Tax Year 2026-27 onward.

The transition rule is date-of-payment based. Rent credited or paid up to 31 March 2026 goes on the old forms. From 1 April 2026, Form 141.

What the new Act did not change

Every enforcement provision survived, renumbered.

• Interest. 1% per month for failure to deduct; 1.5% per month from date of deduction to date of deposit. Part months count as full months, and interest runs on the tax, not the rent.
• Late filing fee. ₹200 per day of delay, capped at the tax deductible. What was Section 234E is now Section 427.
• Penalty. ₹10,000 to ₹1,00,000 where the statement is not filed within a month of the due date.
• No PAN. Deduction jumps to 20% where the landlord has not furnished a valid PAN — and for an individual tenant, that 20% is capped at the last month's rent, but the exposure to interest and fees is not.

The nil-deduction route

Landlords whose actual liability is lower than the deduction can apply electronically for a nil or lower deduction certificate. Under the new Act the application is Form 128, under Section 395 (formerly Form 13 under Section 197). The certificate must be handed to each payer separately — it is not automatic across tenants.

There is also a carve-out worth knowing: no TDS is required on rent paid to a REIT in respect of a real estate asset.

If your landlord is a non-resident

Nothing above applies. Rent to an NRI landlord falls under the non-resident provisions of Section 393, not the resident rent entries. That means 30% plus surcharge and cess, no threshold whatsoever, a mandatory TAN, and quarterly Form 144 (formerly Form 27Q). A tenant who files a Form 141 at 2% for an NRI landlord has created a default, not discharged one.

Practical checklist for FY 2026-27

1. Confirm your landlord's residential status in writing, and collect their PAN.
2. Work out whether you are a specified or non-specified person — it determines the rate and the whole compliance path.
3. Apply the ₹50,000 monthly test, counting part months as full.
4. Deposit on time; the 1.5% monthly interest is unforgiving.
5. Issue the TDS certificate to your landlord, and keep the challan with your lease file.

Frequently asked questions

What replaced Section 194-I and Section 194-IB?

From 1 April 2026, both sit under Section 393 of the Income-tax Act, 2025.

Did TDS rates on rent change under Section 393?

No. Specified persons deduct 10% on land, building or furniture and 2% on plant and machinery. Other tenants deduct 2%. The ₹50,000 monthly threshold also stays.

What form replaced Form 26QC?

Form 141, a unified challan-cum-statement that also replaced Forms 26QB, 26QD and 26QE.

Does Section 393's rent entry apply to NRI landlords?

No. Rent to an NRI landlord falls under the non-resident provisions: 30% plus surcharge and cess, no threshold, a TAN and quarterly Form 144.

General information only, not tax advice. Confirm your position with a chartered accountant.