New TDS Rule: The government has implemented new Rent Rules 2025 to ease the difficulties faced by tenants. These new rules are expected to make renting easier, cleaner, and more organized for everyone. Online registration of rent agreements within 60 days will now be mandatory, and security deposit limits have also been set. Whether you're a tenant or a landlord, it's important to know about the new rules.
The new rules explain how rent taxes will be paid if they exceed a certain limit. This means that if you pay more than ₹50,000 per month, simply paying the rent isn't enough. You must also comply with tax regulations. Failure to do so could result in significant penalties, interest, and legal trouble.
TDS Rules
According to Section 194-IB of the Income Tax Act, if any salaried person, professional, or small business owner pays rent exceeding ₹50,000 per month, they are required to deduct 2% TDS. This TDS is deducted once a year in March or in the month in which the tenancy ends.
According to the tax department, even if your business turnover last year was less than ₹1 crore or your profession was less than ₹50 lakh, you must still deduct tax on rent above ₹50,000. The tenant then needs to fill out Form 26QC and submit Form 16C to the landlord. Many people ignore this, thinking it applies only to companies, and later receive late fee notices from the tax department.
Heavy Penalties for Breaking the Rules
There are also penalties for not following the new rules. A daily late fee of ₹200, 1% interest for not deducting TDS, 1.5% interest for not depositing TDS, a fine of ₹10,000 to ₹1 lakh, and in serious cases, imprisonment of 3 months to 7 years.
Online Registration Mandatory
Now, rent agreements will no longer be limited to paper. They must be registered online within 60 days of signing. This will void unwritten or arbitrary agreements. Failure to register on time will result in a fine of up to ₹5,000.
Control on Rent Increases
Landlords will no longer be able to suddenly increase rents. Written notice must be given 90 days before any rent increase. Tenants will not be forced to vacate their homes unexpectedly. In major cities, tenants were often asked to vacate their homes suddenly. Under the new rules, no one can be evicted without an order from the Rent Tribunal.
Rules for Repairs and Home Inspections
The landlord must notify the landlord 24 hours in advance of any repairs or inspections. Necessary repairs must be completed within 30 days. If not, the tenant can reduce the rent or adjust the amount by making the repairs themselves. Rules have also been established for resolving disputes. Matters related to rent, deposits, wrongful evictions, or damage will now be resolved within 60 days.
Benefits for Tenants
Lower Security Deposits
Control over Rent Increases
Clear Digital Paperwork
Quick Dispute Resolution
Benefits for Landlords
Legally Strong Contracts
Digitization Reduces Disputes
Clear Payments and Records
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