Context
Two tenants pay the same Rs. 40,000 rent. One has a resident landlord and deducts nothing. The other has an NRI landlord and must withhold roughly Rs. 12,500 a month and file cross-border paperwork. The matrix above shows why the landlord's residential status, not the rent amount, is what decides a tenant's TDS duty.
For a resident landlord, Section 194-IB of the Income Tax Act[1] is light. TDS applies only where rent exceeds Rs. 50,000 a month, at 2% (20% if the landlord has no PAN), and the tenant uses their own PAN, no TAN, depositing the tax through Form 26QC within 30 days. Most tenants of resident landlords never cross the threshold and deduct nothing at all.
For an NRI landlord, Section 195[2] is far heavier and starts from the first rupee, with no threshold. The rate is about 31.2% (30% plus 4% health and education cess), the tenant must obtain a TAN, deposit monthly and file quarterly Form 27Q[3], lodge Form 15CA online for the remittance (with Form 15CB from a chartered accountant where rent crosses Rs. 5 lakh), and issue Form 16A each quarter. The NRI landlord can apply under Section 197** for a lower or nil deduction certificate; without one, the full rate stands.
The risk sits with the tenant, not the landlord. The duty to deduct is on the payer, so an undeducted Section 195 TDS is recovered from the tenant, with interest, and can trigger a penalty for the failure to deduct or to file. The fix is to confirm the landlord's residential status before the first payment and deduct from month one. The full Q→A on NRI HRA and the tenant-side TDS trap sets out both sides.