Paying Over Rs. 50,000 Rent? New Rent 2025 Rules and TDS Changes Every Tenant Must Know

Numerous individuals who migrated to Remote areas generally face difficulties when renting accommodation. Many times, they do not even feel comfortable discussing the terms and conditions of renting with landlords. The reason behind this can be that they are not familiar with their rights as tenants, or they hesitate to discuss the renting rules, thinking this may reduce their chances of getting a place to rent.

To facilitate the process of getting a place on rent and curb all the aforesaid challenges, the government of India has introduced the New Rent Law 2025. The new rules are anticipated to make the renting experience simpler, more transparent and more organised for various stakeholders. According to the new renting rules, the centre has now made it compulsory.

To do registration of all rent agreements digitally stamped within a time limit of 60 days. Failure to complete the registration within the specified time period may attract a penalty of up to Rs. 5000.

Now, landlords will not be able to increase the rent amount before 1 year (12 months), and before making revisions in rent, landlords will need to issue a 90-day advance notice. Additionally, landlords cannot demand more than two months’ rent as a deposit.

The new rules explain how taxes will be handled if your monthly rent is above a certain limit. Now, if you pay more than Rs. 50,000 in rent each month, just paying the rent is not enough; you must also follow the new tax requirements. If you don’t know about these rules and fail to follow them, you could end up paying big penalties, extra interest, or even face legal trouble.

As per section 194-IB of the Income Tax Act, every individual paying rent over Rs. 50000 is required to deduct 2% TDS (tax deducted at source). This deduction is taken once a year, either in March or when your rental agreement ends, whichever happens first.

The income tax department says, “Section 194-IB provides that every Individual and HUF, whose turnover or gross receipt from business or profession doesn’t exceed Rs. 1 crore in the case of business and Rs. 50 lakhs in the case of a profession in the immediately preceding financial year, shall deduct tax from the payment of rent for the use of any land or building or both. The tax shall be deducted at the rate of 2% if the rent paid or payable exceeds Rs. 50,000 per month or part of the month.”

Tenants are required to furnish Form 26QC and Form 16C to the landlord. Many individuals are confused about this rule, sometimes think the rule does not apply to them and only applies to companies, resulting in them later receiving notices from the income tax department imposing late fees.

If you don’t follow the rules, you may have to pay a late fee of Rs. 200 per day, 1% interest for not deducting TDS, 1.5% interest for not depositing it on time, and a penalty between Rs. 10,000 and Rs. 1 lakh. In very serious cases, there can even be jail time from three months to seven years.

These TDS rules exist because the government wants more clarity and honesty in property and rent-related transactions. However, it’s not just about TDS. The entire rental system is changing in 2025.

With cities growing fast and the rental market becoming messy, the government has introduced the Home Rent Rules 2025. These rules aim to make renting more transparent, safe, and organised. They will affect every tenant, no matter how big or small.