A lot of people who move to metros or other big cities often face difficulties when renting accommodation. Many times, they don’t feel confident negotiating terms and conditions with landlords. This is either because they are unaware of their rights as tenants, or they hesitate to sound too knowledgeable about laws and rules, fearing that it may annoy the landlord and reduce their chances of getting the place.
With an aim to introduce ease of living for tenants, the Centre has introduced the New Rent Rules 2025. The new rules are expected to make the renting experience simpler, transparent and more organised for various stakeholders. The new rules mandate compulsory registration of the rent agreement online within 60 days and also fix limits on security deposits. There will be now clarity on how and when rent can be increased, timelines for solving disputes and rights related to eviction, repairs, inspections and tenant protection.
It also explains how the tax treatment would be done in case the rent amount crosses a certain threshold. So the new rules make it clear that if you pay more than Rs 50,000 per month, simply paying the rent is no longer enough. Now, if you are unaware of the new rules related to tax and rent, you could face hefty penalties, interest, and even legal action.
TDS Rules: Tax deduction mandatory once a year on rent above Rs 50,000
According to Section 194-IB of the Income Tax Act, any person — whether employed, professional, or not engaged in any business — paying rent exceeding Rs 50,000 is required to deduct 2% TDS. This deduction is made once a year, in March or the month the tenancy ends, whichever is earlier.
“Section 194-IB provides that every Individual and HUF, whose turnover or gross receipt from business or profession doesn’t exceed Rs. 1 crore in case of business and Rs. 50 lakhs in case of a profession in the immediately preceding financial year, shall deduct tax from the payment of rent for use of any land or building or both. The tax shall be deducted at the rate of 2% if the rent paid or payable exceeds Rs. 50,000 per month or part of the month,” the Income Tax Department says, explaining the rule.
The tenant must then fill out Form 26QC and submit Form 16C to the landlord.
Many people ignore this rule, thinking it applies only to companies, and later receive notices from the tax department charging late fees.
For breaking the rules, there are provisions like Rs 200 per day late fee, 1% interest for not deducting TDS and 1.5% interest for not depositing it, and a fine ranging from Rs 10,000 to Rs 1 lakh, and in serious cases, imprisonment ranging from three months to seven years
These TDS rules are necessary because the government wants to increase transparency in property and rental transactions.
But it’s not just about TDS, the entire tenancy structure is changing in 2025.
In light of increasing urbanization and the chaos in the rental market, the government has implemented the Home Rent Rules 2025, which aim to make the rental process transparent, secure, and systematic. These rules will impact every tenant, big or small.
Digital registration of every rent agreement mandatory
-Rental agreements will no longer be limited to paper. The new rules mandate that every rental agreement must be stamped and registered online, within 60 days of signing.
-This is expected to eliminate fake, verbal, or undocumented agreements. Failure to register on time can result in a penalty of up to Rs 5,000.
An end to arbitrary security deposits
Landlords in cities used to demand advances ranging from six months to a year. The 2025 rules now clarify that the security deposit for residential housing will be a maximum of two months. Tenants’ upfront financial burden will now be significantly reduced.
Rent increases are also subject to the rules—90-day notice required
Now, it will no longer be possible to suddenly increase rent, make a rash decision, or arbitrarily increase the amount every year. Landlords are required to provide 90 days’ written notice before increasing rent.
Eviction is no longer simple—first the law, then action
In many major cities, it was common for tenants to be suddenly asked to vacate their homes. The new rules state that tenants cannot be evicted without a Rent Tribunal/court order. This means that arbitrary demands like “vacate the house within a month” are now legally invalid.
House repairs and inspections: Tenant rights are also protected
If the landlord wishes to enter for repairs, they must provide 24-hour notice. Necessary repairs must be completed within 30 days—if not, the tenant can reduce the rent or pay for the repairs.
Faster dispute resolution
Disputes related to rent, deposits, illegal evictions, or damages can now be resolved within 60 days. This will prevent protracted disputes for both parties.
Impact of the new rule on both tenants and landlords
Benefits for Tenants: Lower Security Deposits, Control over Rent Increases, Clear Digital Paperwork, Faster Dispute Resolution.
Benefits for Landlords: Strengthened Contract Validity, Reduction in Disputes Due to Digitization, Transparency in Payments and Records.
Conclusion: Rental market is now more secure, transparent
The rental market in India has previously been unorganised, arbitrary, and at times stressful. TDS compliance and the Rent Rules 2025 together are taking this market into a new era—one where documents will be clear, rights will be clear, transparency will increase, and rental relationships will be built on trust.