No TDS On Rent Paid To Each Joint Owner? Know The Condition On Per Month Payment

Tenants who have rented properties with more than one owner might get confused about whether or not to pay tax deducted at source (TDS) when their total monthly rent exceeds Rs 50,000. However, under the Income Tax Act, 1961, this depends on how much rent is paid to each individual owner rather than the total rent for the property.

Threshold Applies To Each Joint Owner

Under Section 194-IB of the Income Tax Act, 1961 and the corresponding Section 393 of the Income Tax Act, 2025, an individual or a Hindu Undivided Family (HUF), who is not otherwise required to deduct TDS, must deduct tax at source at 2 per cent if the monthly rent paid exceeds Rs 50,000.

The rule becomes relevant when a property has more than one owner and the rent is divided between them. In such cases, the Rs 50,000 monthly threshold is taken into consideration separately for each recipient of the rent, not for the property as a whole.

For instance, if a tenant pays Rs 80,000 per month for an apartment jointly owned by two individuals and each of them receives Rs 40,000 per month, no TDS will be deducted as the portion of the rent received by each of the owners lies within the limits.

Number Of Tenants Does Not Change The Rule

The tax treatment stays the same even if there is only one tenant paying the total rent. The determining factor is the amount received by each co-owner.

If the rent payable to every joint owner is below Rs 50,000 a month, the tenant is not required to deduct TDS, even if the combined monthly rent for the property exceeds Rs 50,000.

However, if the share of rent paid to any one of the joint owners exceeds Rs 50,000 in a month, TDS at 2 per cent would apply to that payment, subject to the provisions of the law.

TDS Is Deducted At The End Of The Tenancy Period Or Financial Year

Where TDS is applicable under Section 194IB, it is not deducted every month. Instead, the tenant must deduct the tax from the rent payable for March of the financial year. If the tenancy ends before March, the deduction should be made from the rent payable for the last month of the tenancy.