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 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 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**, 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.