Every year lakhs of people come to India to settle in the glitter of cities. Whatever be the reason – job, studies or business, finding a house on rent is the first challenge. But under the old rules, arbitrariness, fights and tax complications were common. Now the government has implemented new rent rules from 2025, which promise to make the rental world transparent and fair. These changes are based on the Model Tenancy Act and Income Tax rules, which experts are calling “tenant protection shield”.

New TDS rule: Tax deduction necessary on rent above Rs 50,000

Imagine, you take a flat in a busy area of ​​Delhi on a monthly rent of Rs 55,000. Earlier we could manage just by paying the rent, but not anymore. Under Section 194-IB of the Income Tax Act, if your monthly rent exceeds Rs 50,000 – whether you are salaried, freelancer or small businessman – it is mandatory to deduct 2% TDS.

This TDS is deducted once a year in March or when the rent agreement expires. Tax expert Dr. Rakesh Gupta says, “Businesses with turnover of less than Rs 1 crore in the last financial year or professionals with income less than Rs 50 lakh are also not out of this. This rule was in place since 2017, but the strictness has increased in 2025.”

The tenant has to fill Form 26QC online, and the landlord has to issue Form 16C. According to data, the Income Tax Department sent TDS default notices in more than 40% of cases in 2024 – mostly because people thought it was a rule only for companies.

The price of breaking the rules: fines, interest and the threat of jail

Taking it lightly can prove costly. Late filing charges Rs 200 per day, 1% monthly interest on non-deduction of TDS and 1.5% interest on non-deposit. The fine can range from Rs 10,000 to Rs 1 lakh, and in serious violations even jail term of 3 months to 7 years. Experts believe that these punishments will reduce minor disputes, as rent dispute cases increased by 25% in 2023.

Online Registration: Agreement to be digitalized in 60 days

Now the rent agreement will not be a paper book but will become a digital record. It is necessary to register on the state portal within 60 days of signing. This will end arbitrary agreements, and both parties will get legal protection. Penalty up to Rs 5,000 on delay. In the background, the government aims to have 80% of rent deals digital by 2030 to curb black money and fraud.

Curb on fare increase: 90 days notice mandatory

Landlords will no longer be able to increase rent overnight. Written notice will have to be given 90 days before the increase. It is also difficult to vacate the house suddenly – Rent Tribunal order is necessary. In big cities like Mumbai and Bengaluru, where rents increase by 15-20% annually, this rule will provide stability to tenants.

Repairs and Inspections: Strengthening Tenants

Landlord will inform 24 hours in advance for inspection or repair. Necessary repairs must be completed within 30 days, otherwise the tenant can reduce the rent or adjust the money by getting the repairs done himself. Disputes – whether over deposits, fares or damages – will be resolved within 60 days. Security deposit now limited to 1-2 months’ rent, which was earlier 6-12 months.

What is the benefit to the tenants?

• Security deposit reduced: The fear of money getting stuck will reduce.


• Rent Control: Budget planning made easy.


• Digital Records: Evidence always ready.


• Fast Justice: Fights end quickly.

Homeowners win

• Strong legal contract: Rent collection made easy.


• Less Controversy: Transparency through Digitization.


• Clear Payments: Tax Records Automatic.

Why do these changes matter?

These rules are not just on paper, they are life changing. Tenants will be stress free, landlords will be safe. According to experts, this can organize the rent market by 10-15%, and black money will reduce in the economy. If you rent or let, read the rules today – one small step, big savings!