TDS on Rent
Tax related queries and clarifications for property owners and tenants.
Tax Related Queries / Clarification
Owner Tax Clarification
TDS (Tax Deducted at Source) is a mechanism under the Income Tax Act where the payer — in this case, your tenant — deducts tax at a specified rate from your rent before remitting the balance to you, and deposits the deducted amount directly with the government once the specified threshold is exceeded.
A common question from our property owners is: “If I receive my rent through Nestaway, why isn't Nestaway deducting the TDS?”
It is important to understand that Nestaway acts as a facilitator to manage the rental process. While the payment may be processed through our platform, the legal rental agreement exists between the Tenant and the Owner. Therefore, the responsibility to deduct and deposit TDS lies with the Tenant (the payer), and not Nestaway.
To help your tenant deduct TDS correctly on your rent, please ensure:
- Your residency status (Resident or Non-Resident) is correctly communicated, as the applicable rules differ significantly.
- Your PAN details shared with the tenant.
The applicability and rate of TDS depend on your residency status and your tenant's category, as summarized below:
| Aspect | Section 393(1), IT Act 2025[Section 194-IB, IT Act 1961] | Section 393(1), IT Act 2025[Section 194-I, IT Act 1961] | Section 393(2), IT Act 2025[Section 195 - NRI, IT Act 1961] |
|---|---|---|---|
| Type | Tenant & Owner both Resident | Tenant & Owner both Resident | Owner is Non-Resident |
| Applicable if Tenant is | Individual / HUF (Not under tax audit) | Entity / Individual (Subject to tax audit) | All tenants paying to non-residents |
| Landlord Status | Resident | Resident | Non-Resident / NRI |
| Tax Rate | 2% | 10% | 31.2% (Incl. Cess) |
| Monetary Limit | Over ₹50,000 per month | Over ₹50,000 per month | No minimum limit (deduct on any amount) |
| Deduction Timing | Once a year (last month of year/tenancy) or last month's rent | Monthly | Monthly |
| TAN Required? | No (Use PAN) | Yes | Yes |
| Certificate / Form | Form 141 [old: Form 26QC] (Last month rent / Year End) | Form 131 [old: Form 16A] (Quarterly Return) | Form 144 [old: Form 27Q] (Quarterly Return) |
Note: This information is shared to create awareness among owners and tenants regarding TDS obligations on rent (including applicable sections, forms, and limits). If you face any issue or have any doubt regarding TDS deduction or filing, please consult a qualified tax consultant or Chartered Accountant before taking any action.
Once your tenant files their quarterly or yearly TDS return under Section 393(1) of the IT Act 2025 [Section 194-IB as per the IT Act 1961], they are required to share the TDS certificate with you as proof that TDS has been deposited against your PAN.
Your tenant is expected to file the return and share the certificate by the following due dates:
- April – June (Q1): 31st July
- July – September (Q2): 31st October
- October – December (Q3): 31st January
- January – March (Q4): 31st May
Yes, GST is charged on the applicable service/facilitation fee. You can claim Input Tax Credit (ITC) on this GST only if you have shared a valid GST Number (GSTIN) with us.
If you do not have a GST Number, the transaction is reported as a B2C (Business-to-Consumer) supply in our GST. In such cases, you cannot claim any GST Input Tax Credit.