TDS on Rent, Freelance Income & Property Sale: A Quick Reference
Three situations that come up constantly and the deduction rates that apply — with the caveat that rates do change and this is a starting point, not a final answer.
These are the three TDS situations we field the most questions about outside of standard salary TDS. Rates and thresholds are set by the Finance Act and do change — treat this as a starting point for the conversation, not a substitute for confirming the current rate before you deduct.
Rent paid by an individual (Section 194-IB)
If you’re an individual or HUF not subject to tax audit, paying rent above ₹50,000 a month, you’re required to deduct TDS — deducted once a year (in the last month of tenancy or the financial year) rather than monthly, which trips people up because there’s no monthly TDS habit to prompt it.
Freelance and professional fees (Section 194J)
Businesses paying a freelancer, consultant, or professional (legal, medical, technical, accounting) above the threshold in a financial year must deduct TDS before payment. This is the one freelancers most often discover only when they check Form 26AS and find tax already deducted against their PAN.
Sale of property (Section 194-IA)
For immovable property (other than agricultural land) sold for ₹50 lakh or more, the buyer — not the seller — is responsible for deducting TDS and depositing it before registration. This is a common point of confusion in resale transactions: the seller doesn’t deduct anything, but should confirm the buyer actually deposited it, since the credit shows up against the seller’s PAN.
If you’re on either side of one of these transactions — paying rent, engaging a freelancer, buying or selling property — it’s worth a quick call before the payment goes out rather than after, since correcting a missed TDS deduction after the fact involves interest and, in some cases, disallowance of the expense.
Have a question about your own numbers?
Talk to our team, or run the numbers yourself first.