return to news
  1. Upstox
    /
  2. News
    /
  3. Personal Finance News
    /
  4. Tax
    /
  5. TDS on rent and No PAN cases: What landlords and foreign diplomat tenants should know

Personal Finance News

TDS on rent and No PAN cases: What landlords and foreign diplomat tenants should know

balwant jain
By Balwant Jain

3 min read | Updated on May 22, 2026, 07:56 IST

Google
SelectUpstoxas yourPreferred news source
Copy link
Twitter Page
Linkedin Page
Whatsapp Page

SUMMARY

A French diplomat renting a high-value home in Delhi raises key tax questions around TDS on rent, PAN requirements, and compliance under Indian income tax rules for landlords and foreign tenants.

TDS on rent and no PAN cases

There is no provision under the Income Tax laws to provide for an exemption to foreign diplomats from compliance with having to deduct tax at source, even if their salaries are not taxable in India. | Image: Shutterstock.

Renting to a foreign diplomat in India may sound straightforward. Still, it can raise unusual tax compliance questions for landlords, especially when TDS obligations are not being met due to procedural gaps such as the absence of a PAN. Today's Q&A explains such details in response to a query by a reader.

Open FREE Demat Account within minutes!
Join now
Question: I have a French diplomat as a tenant with a personal house lease of ₹2,60,000 per month in Delhi. He does not have a PAN card. He is not deducting tax at source @ 2% on rent paid by him. I am showing the rent in my returns and paying applicable tax on it. Will non deduction of TDS lead to any problems for the tenant? He is a diplomat so getting tax free salary.
Answer: Section 194IB of the Income Tax Act, 1961, and its corresponding Section 393 of the Income Tax Act 2025 require an individual and an HUF to deduct tax at source @ 2% on the amount of rent payable if the monthly rent exceeds fifty thousand rupees. The tenant is required to deduct the whole of such tax from the rent payable for March of the financial year or from the amount of rent payable for the last month of tenancy in case the tenancy comes to an end earlier.
For depositing the tax so deducted, the tenant is not required to obtain a Tax Deduction Account (TAN) number, as the tenant can use a challan cum TDS return by using the PAN number of the tenant and the landlord.

There is no provision under the Income Tax laws to provide for an exemption to foreign diplomats from compliance with having to deduct tax at source, even if their salaries are not taxable in India.

Since you are disclosing the rent received from the French diplomat in your ITR and paying the requisite tax on it, he may not be required to pay the amount of tax that he was required to deduct, but may still receive a notice from the income tax department if the default is detected by the income tax department. He may still be required to pay the interest on the amount of TDS.
Since the TDS is required to be deducted from the rent of March, I would advise you to ask the French diplomat to apply for a PAN number in India and deposit the amount of tax required to be deducted for the financial year 2025-2026.

Even if the rent for March has already been paid, the tenant can still be reimbursed for the TDS amount that should have been deducted. Obtaining a PAN does not automatically require a person to file an income tax return in India, an ITR is only required if the person meets the prescribed filing conditions. In this case, having a PAN and complying with TDS requirements can help avoid future notices or compliance issues from the Income Tax Department.

Have a personal finance, mutual fund, or income tax query? We will try to get them answered by experts. Write to sangeeta.ojha@rksv.in
For all personal finance updates, visit here

Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.

About The Author

balwant jain
Balwant Jain is a Mumbai-based tax and investment expert.

Next Story