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An Indian individual or HUF tenant — salaried or non-tax-audit professional — paying rent above ₹50,000 per month on a residential lease must run a Section 393(1) Sl. 2(i) code 1007 TDS deduction stream once a year: identify the ₹50,000 monthly threshold breach, compute 2% on gross rent for the deductible period, deposit via Form 26QC within 30 days of deduction, and issue Form 131 to the landlord — without a structured control the threshold is missed, the deduction timing is wrong, the challan is late, and Form 26AS at the landlord side does not tie to the certificate issued.
Identify any month in the financial year where rent paid to a single landlord crosses ₹50,000; if breached, compute TDS at 2% (code 1007, provisional) on the gross rent for the relevant portion of the year; deduct once in the last month of tenancy (or last month of the FY); deposit via Form 26QC within 30 days; issue Form 131 to the landlord within 15 days of the Form 26QC due date; tie back to landlord's Form 26AS credit for reconciliation.
Lease master per property with landlord PAN, monthly rent, security deposit, lease start/end, residential-vs-commercial flag; monthly threshold tracker per landlord PAN checking the ₹50,000 trigger; single-event TDS computation engine at code 1007 (provisional) / Section 393(1) Sl. 2(i) / 2% rate; Form 26QC filing tracker with challan reference; Form 131 issue tracker per landlord per year.
An annual rent close pack showing the landlord, the monthly rent, the threshold-breach month, the deductible base, TDS deducted at 2% under code 1007 (provisional), Form 26QC filing status, and the Form 131 certificate issued to the landlord — ready for reconciliation against the landlord's Form 26AS and for the tenant's own Section 80GG / HRA position in their annual return.
A senior software engineer in Bengaluru renting a 3BHK apartment for ₹80,000 a month from an individual landlord closes the financial year and pulls the rent ledger: ₹9.60 lakh of annual rent on a residential lease, with TDS deduction due once a year under the Income Tax Act 2025 — code 1007 (provisional, pending CBDT verification) at 2% under Section 393(1) Sl. 2(i), the successor to legacy Section 194-IB. The reconciliation has to tie three streams: the rent paid each month, the annual Form 26QC challan, and the landlord-side Form 26AS credit. The structural rule is straightforward, but the payment-code map under the new framework has shifted enough that individual taxpayers still revert to legacy 194-IB habits — and that mis-application is the most common source of TDS rent individual HUF Section 393 payment code 1007 India reconciliation breaks in FY 2026-27.
Quick reference
| Item | Value |
|---|---|
| Parent section | Section 393(1) Sl. 2(i) of Income Tax Act 2025 |
| Payment code | 1007 (provisional, pending CBDT verification) — Rent by Individual/HUF above ₹50,000/month |
| Rate | 2% on gross rent for the deductible period |
| Legacy section | Section 194-IB |
| Threshold | Above ₹50,000 per month in any month of the financial year |
| Deductor base | Individual or HUF not subject to tax audit |
| Deduction event | Once a year — last month of tenancy or last month of the FY (March), whichever is earlier |
| GST on residential rent (residential use) | Exempt |
| Challan / statement | Form 26QC within 30 days of end of deduction month |
| TDS certificate | Form 131 (replaces Form 16C / 16A) within 15 days of Form 26QC due date |
What code 1007 covers — the individual/HUF rent lane
The Income Tax Act 2025 (effective 1 April 2026) restructured the TDS framework under Section 393, with each deduction type now identified by a four-digit payment code. The personal-tenant rent code:
Code 1007 — Section 393(1) Sl. 2(i), rent paid by individual/HUF tenant above ₹50,000 per month. Covers the case where an individual or HUF not subject to tax audit pays rent above ₹50,000 per month for any portion of the year on a residential (or in rarer cases commercial) lease. Rate is 2%. Deduction is once in the financial year on the last month of tenancy (or the last month of the FY if tenancy continues), deposited via Form 26QC.
Code 1007 is the successor to legacy Section 194-IB. The deductor base is exclusively individual / HUF taxpayers who are not in tax audit — corporate, firm, LLP, and tax-audit-bound individual/HUF tenants fall under different rent codes (code 1008 for plant and machinery at 2%; code 1009 for land and building at 10%).
Threshold mechanics — ₹50,000 per month, single-event deduction
The ₹50,000 per month threshold under code 1007 applies if rent crosses ₹50,000 in any month of the financial year. Three structural rules:
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Single-month trigger. Even one month where rent crosses ₹50,000 triggers the deduction obligation for the relevant portion of the year. There is no aggregate annual threshold to track in the legacy ₹2,40,000 sense — the test is the monthly rent figure.
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Single-event annual deduction. Unlike corporate-tenant rent (codes 1008 / 1009) which deducts monthly, code 1007 deducts once a year — in the last month of tenancy if the tenancy ends mid-year, or in March if tenancy continues. The single deduction event is computed on the gross rent for the deductible period.
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Form 26QC filing within 30 days. The single annual deduction must be deposited via Form 26QC within 30 days of the end of the month in which the deduction is made. A March deduction must therefore be filed by 30 April; a mid-year termination deduction in (say) October must be filed by 30 November.
Worked example — individual tenant, ₹80,000/month residential rent
A salaried professional in Bengaluru with the following rent position for FY 2026-27:
| Item | Value |
|---|---|
| Property | 3BHK residential apartment |
| Landlord | Individual landlord (PAN furnished) |
| Monthly rent | ₹80,000 |
| Lease period | April 2026 to March 2027 (full FY) |
| Annual rent | ₹9,60,000 |
| GST | Exempt (residential use) |
| Threshold check | ₹80,000/month is above ₹50,000 — code 1007 applies |
| Payment code | 1007 (provisional) under Section 393(1) Sl. 2(i) |
| Rate | 2% |
| TDS deduction event | March 2027 (last month of FY) |
| TDS amount | ₹19,200 (2% of ₹9,60,000) |
| Net March payment to landlord | ₹60,800 (₹80,000 − ₹19,200) |
| Form 26QC due | 30 April 2027 |
| Form 131 issue to landlord | Within 15 days of Form 26QC due date (by 15 May 2027) |
Reconciliation must produce three streams at year-end:
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Annual rent ledger — every monthly rent paid recorded, threshold-breach confirmed, gross rent for the deductible period computed.
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Form 26QC challan ledger — single annual TDS deposited within 30 days of the deduction month, tied back to the deduction event. The March 2027 deduction of ₹19,200 must be filed by 30 April 2027 with the landlord PAN.
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Form 131 certificate — one certificate issued to the landlord within 15 days of Form 26QC due date, tying back to the deduction event for the landlord’s Form 26AS reconciliation.
TDS Payment Code Lookup — 1001 to 1092
Search the full payment-code map under the Income Tax Act 2025 — rent (1007 individual/HUF, 1008 plant and machinery, 1009 land and building), contractor (1023 / 1024), professional (1027), and 80+ more. Maps each new code to its legacy 194x section so your vendor master migration is clean first time.
Open the TDS Payment Code Lookup →GST on residential rent — usually exempt for code 1007
Rent on residential property let out for residential use is exempt from GST. Since the dominant code-1007 pattern is an individual or HUF tenant paying for a residential apartment, the GST overlay typically does not apply.
Where the same residential premises are let to a registered business for commercial use, GST at 18% applies under reverse-charge by the recipient — but that scenario shifts the lease character and may move the tenant out of the code-1007 net (depending on tax-audit status and rent structure). For pure residential leases under code 1007:
- Rent component — basis for the 2% TDS deduction at code 1007
- No GST overlay — landlord cannot charge GST on residential rent for residential use
- Net payable to landlord — gross rent minus 2% TDS in the deduction month
The single-event computation for a ₹80,000/month full-year lease is therefore: gross rent ₹9,60,000, TDS ₹19,200 (2%), with the deduction reducing the March payment to the landlord by ₹19,200 and the ₹19,200 deposited as challan via Form 26QC.
Cross-era reconciliation — legacy 194-IB deductions in 26AS
For FY 2026-27 deductions, the entry is code 1007 (provisional) under Section 393(1) Sl. 2(i). But historical Form 26AS for the landlord — especially when reconciling carried-forward TDS receivables from FY 2025-26 — will continue to reflect legacy Section 194-IB entries. Reconciliation must keep the legacy cross-reference alive for at least the FY 2025-26 closing period:
- 194-IB ↔ code 1007 (individual/HUF rent above ₹50,000/month, 2% under the new regime; was 5% under legacy 194-IB until the migration)
Any 26AS line raised under the legacy section must be matched to the books using the cross-era mapping so the TDS receivable ledger closes cleanly at year-end. Note that the rate moved from the legacy 5% under 194-IB to 2% under the new code 1007 framework — recompute carried-forward positions accordingly.
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What automated reconciliation changes
Running rent TDS for an individual or HUF tenant under code 1007 with a single annual deduction event, Form 26QC challan within 30 days, and Form 131 certificate to the landlord within 15 days of the challan due date is a lease-event and threshold-tracking problem. Manual control is a March-month exercise dominated by spreadsheet computation, landlord PAN verification, and the Form 26QC NSDL portal upload. Purpose-built TDS reconciliation software treats every lease as a tagged event stream with the correct payment code by default, runs the ₹50,000 monthly threshold tracker per landlord-PAN, and produces the Form 26QC filing and Form 131 certificate from the same source ledger. TransactIG carries the Section 393 payment-code map embedded — code 1007 (provisional), 1008, 1009 and 80+ other codes — with the legacy 194x cross-reference for cross-era reconciliation. Customer outcomes include match-rate improvement from 51% to 88%, with build in two-to-four weeks on AWS Mumbai (ISO 27001:2022). For the broader reconciliation surface, see reconciliation software India.