Most people think TDS is something their employer handles.
Salary gets credited. TDS gets deducted. Done.
But the moment you start paying rent above a certain amount, or buy a property, TDS becomes your responsibility. Not your employer’s. Not your CA’s. Yours.
And that is where mistakes happen. Quietly. Expensively.
Here are the most common ones people make, and what to do instead.
A Quick Refresher
Two simple rules.
Rent above ₹50,000 per month, deduct 2% TDS before paying your landlord.
Property purchase above ₹50 lakh, deduct 1% from the seller’s payment.
The deductor in both cases is the person paying. Not the person receiving.
Most people find that out only after getting a notice.
Mistake 1: Not Knowing You Are Responsible
This is the most common mistake. And the most expensive.
Many tenants and property buyers genuinely do not know TDS applies to them. They assume it is only for businesses or salaried employees.
Wrong.
If you pay monthly rent of ₹55,000 to your landlord, TDS applies. If you buy a flat for ₹80 lakh, TDS applies.
Ignorance does not protect you from penalties. The Income Tax Department sends notices to the deductor, that is you, not the landlord or the seller.
The fix is simple. Before signing any rent agreement or property deal above the threshold, check your TDS obligations first.
Mistake 2: Deducting the Wrong Percentage
People who do know about TDS sometimes get the rate wrong.
- TDS on rent: 2% for rent paid to resident individuals (applicable from October 2024 onwards, reduced from earlier 5%)
- TDS on purchase of property: 1% of the total transaction value
Deducting less than the required amount means you are still liable for the shortfall, plus interest. Deducting more creates hassle for your landlord or seller when they file their returns.
Always verify the current applicable rate before deducting. Tax rules do change.
Mistake 3: Missing the Deposit Deadline
Deducting is step one. Depositing on time is step two. Both matter.
- TDS on rent: deposit by 30th of the following month
- TDS on purchase of property: deposit within 30 days from end of that month
Miss the deadline and interest kicks in at 1.5% per month. On a property deal of ₹80 lakh, that is not a small number.
Put a reminder. Treat it like an EMI.
Mistake 4: Not Filing Form 26QB for Property Purchases
This one trips up almost every first-time property buyer.
When you deduct TDS on purchase of property, you must file Form 26QB online. This is the challan-cum-statement that records the transaction and the TDS deposited.
Many buyers deposit the TDS but forget to file Form 26QB. Or they file it with wrong details, wrong PAN of the seller, wrong property value, wrong transaction date.
Errors in Form 26QB cause a mismatch in the seller’s Form 26AS. The seller then faces problems while filing their own income tax return. And you face notices for incorrect filing.
Take your time filling this form. Double-check the seller’s PAN. Match it with the sale deed.
Mistake 5: Not Issuing Form 16C to the Landlord
After depositing TDS on rent, you must issue Form 16C to your landlord.
This is the TDS certificate. It tells your landlord how much tax has been deducted on their behalf. They need it to claim credit in their income tax return.
Many tenants deposit the TDS correctly but never bother issuing Form 16C. The landlord has no proof. Their Form 26AS shows the credit but they cannot reconcile it without the certificate.
Form 16C must be issued within 15 days of the due date of furnishing the challan. Do not skip this step.
Mistake 6: Splitting Payments to Avoid TDS
Some tenants try to avoid TDS on rent by structuring payments below ₹50,000. For example: paying ₹49,000 as rent and ₹10,000 as “maintenance.”
This does not work.
The Income Tax Department looks at the total consideration paid for the property. If the combined amount crosses the threshold, TDS applies on the full amount. Artificial splitting is treated as tax evasion, not smart planning.
Same applies for TDS on purchase of property. If the deal is ₹80 lakh but the agreement shows ₹48 lakh, the actual transaction value still attracts TDS. The stamp duty valuation is also considered.
Mistake 7: Ignoring TDS When the Seller Is an NRI
This is a completely different situation that many buyers walk into unprepared.
If you are buying property from a Non-Resident Indian, the TDS rate is not 1%. It can go up to 20% or higher depending on the holding period and type of capital gains.
The rules here are significantly different from regular TDS on purchase of property transactions. You may also need a Tax Deduction Account Number or TAN in some cases.
If the seller is an NRI, consult a tax professional before signing anything. This is not a situation to navigate alone.
A Quick Reference Table
| Situation | Rate | Form to File | Deadline |
| Rent above ₹50,000/month | 2% | Form 26QC | 30th of next month |
| Property purchase above ₹50 lakh | 1% | Form 26QB | 30 days from end of month |
| Property purchase from NRI | 20%+ | Form 27Q | 30 days from end of month |
| TDS certificate to landlord | — | Form 16C | Within 15 days of challan due date |
| TDS certificate to seller | — | Form 16B | Within 15 days of challan due date |
Final Thought
TDS on rent and TDS on purchase of property are not complicated once you know the rules. The problem is most people discover the rules only after getting a notice.
Wrong rates. Missed deadlines. Missing forms. These are not big errors. But each one carries a penalty.
The cost of getting it right the first time is zero.
The cost of fixing it later, in interest, penalties, and stress is always higher.
Know your obligations before the deal is signed. Not after.
