If you’re paying rent above ₹50,000/month and haven’t deducted TDS, you could face penalties and must act soon.

This article is a part of our detailed article series on various communications that the income tax department sends you. Ensure you have read the other parts here: Show/Hide

📚 Table of Contents

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• What is the HRA and TDS-related email that tax-payers are receiving?
• Why did you get such a notice regarding HRA and TDS?
• What is Section 194IB of the income tax act?
• What should you do as a tenant if you have received this notification regarding TDS and HRA?
• What should you do if you do not have the old PAN cards for the previous landlords?
• What should tenants do regarding TDS if the landlord is an NRI?
• How should you file an updated return if you wish to change your HRA claim?

What is the HRA and TDS-related email that tax-payers are receiving?

The email, from ITD_Support@insight.gov.in (which is a valid income tax communication domain and not a phishing scam), begins like this:

It is observed that you have claimed an exemption for HRA under section 10(13A) amounting to …

However, it appears that no TDS has been deducted from the rent paid as required under the TDS provisions u/s 194-IB. We kindly request that you verify this claim and rectify any mistakes by filing an updated ITR by 31.03.2025.

While the example above is for an email, you can also get the same notice as an SMS.

Why did you get such a notice regarding HRA and TDS?

First some basics on the HRA process:

• unless your rent is less than ₹1 lakh/year, you need to declare your landlord’s PAN number while claiming HRA
• this PAN number is reported by your company to income tax and is then linked to the landlord’s AIS (Annual Information Statement) to ensure that the landlord pays tax on the rental income
• TDS is required if the rent, per landlord’s share is more than ₹50,000/month or the landlord is an NRI

If there are multiple owners of a property receiving rent, then the ₹50,000/month rule is per landlord. So in case there are joint owners and the rent is ₹80,000/month, there is no TDS since per co-owner share of the rent is less than ₹50,000. If you got the notification and you have resident Indian co-owners with rental share less than ₹50,000, then you do not need to pay deduct TDS

For NRI landlords, there is no lower limit for TDS deduction.You need to deduct TDS even if the rent is ₹1.

The notice gets triggered if HRA is claimed where:

• the rent is more than ₹50,000, the landlord is a resident Indian and no Form 26QC (TDS on rent) exists
• the landlord is an NRI and there is no TDS on the rent

The rule of TDS for rent comes under Section 194IB of the income tax act.

What is Section 194IB of the income tax act?

Section 194IB applies if the tax payer is an individual/HUF not required to audit accounts under the IT Act. The official income tax website describes this section as:

TDS on rent, if applicable, must be deducted

• either once a financial year (Apr to Mar) in March
• or in the last month of rent paid (when vacating)

In either case, the TDS must be deposited against the landlord’s PAN and Form 26QC must be generated in the income tax portal within the end of the next month after the last rent paid. Then generate Form 16C within 15 days in the TRACES portal and issue that to the landlord. The landlord will use it as a source of income statement just like the usual Form 16 issued by companies to their salaried employees. The tenant does not need to apply for TAN unless the landlord is an NRI.

What should you do as a tenant if you have received this notification regarding TDS and HRA?

First and foremost, you SHOULD NOT ignore it.

There are two potential problems here:

• the HRA claim might be invalid (though a valid HRA claim has nothing to do with non-deduction of TDS - that is a separate problem)
• TDS was not deducted under one of two cases (rent over and above ₹50,000/month or the landlord being NRI or both)

We will not consider the HRA claim aspect here since that will be invalid only if the landlord, after seeing the rent details in their Annual Information Statement (AIS), has claimed that their PAN was falsely used for rent payment and subsequent HRA claim.

You have three options here as the tenant:

• Option 1: Pay the TDS, if applicable, by logging into the income tax website, get Form 26QC and issue Form 16C to the landlord. You might be required to pay any penalties for late filing.
• Option 2: If the TDS claim is invalid, then you need to respond to the notice (if any) by logging into the Notices section of the income tax website and responding there. If there is no notice, then there is nothing to do. Check once more before 31st March
• Option 3: If the HRA claim is invalid, i.e. the rent paid is fake, then refiling the income tax return in the past is the right step to take. This will lead to additional taxes and penalties

Related:
Which mistakes in tax-proof submission that can make you lose your HRA exemption?

Note: Since the TDS is filed late, the landlord will not get a benefit for previous tax years and the entire TDS and penalties will come from the tenant’s pocket. However, if you can get the landlord to give a copy of their ITR showing that they have included the rent in the return then under Section 201(1) you are not considered a TDS defaulter. Speak to a CA regarding the steps on this. You will still be needed to pay the interest on delayed TDS deduction but can save the actual TDS coming out of your own funds.

What should you do if you do not have the old PAN cards for the previous landlords?

TDS is deposited against the landlord’s PAN number. If you don’t have the PAN, then your HRA claim will not be valid if it is above the ₹1 lakh/month threshold.

Getting hold of a competent professional CA is a great option at this stage to prevent the problem from becoming bigger than what it is right now.

Related:
Income Tax Notices Under Section 148A: What you should and should not do?

What should tenants do regarding TDS if the landlord is an NRI?

Tenants must deduct TDS at 31.4% (30% TDS + 4% cess) when the landlord is an NRI irrespective of the rent amount.

TDS is not optional for the tenant and a penalty up to the TDS amount is applicable under Section 271C if not deducted. This penalty is to be paid by the tenant. Therefore it is the tenant’s responsibility to know for sure if the landlord is an NRI or not. If TDS is not deducted, prosecution (with jail time) is possible under Section 276B.

Related:
Who is an NRI and who is not? Understanding FEMA and NRE/NRO bank accounts

NRI receives = Rent - TDS in their NRE/NRO account

Tenant pays TDS to the income tax authorities

Important: Unlike TDS for resident Indian landlords, NRI TDS requires the tenant to have a TAN number.

The other side of this equation, from the NRI perspective is explained here: NRIs: How to File Your Income Tax Return on Rental Income from Indian Property

How should you file an updated return if you wish to change your HRA claim?

If you decide to amend past returns and revert the HRA claim, then you must file an updated return.

The process of filing an updated return is called an ITRU filing and is explained here: What should you do if you have received the income tax SMS telling you about the opportunity to file your updated ITR under section 139(8A)?