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Warehouse Rent TDS Filing for AY 2026-27: Guide

ITAI Blogger
ITAI Blogger

If you own a warehouse and receive rent during FY 2025-26, the tenant may deduct tax at source (TDS) before making payment. However, the responsibility for deducting and filing TDS usually rests with the tenant or payer, not the warehouse owner. The owner must verify the TDS credit in Form 26AS or the Annual Information Statement (AIS), collect Form 16A, and report the rental income in the income tax return for AY 2026-27.

This guide explains TDS filing by a warehouse owner in AY 2026-27, the Section 194-I rate and threshold, quarterly Form 26Q filing, Form 16A, TAN registration and important due dates for FY 2025-26.

TDS on warehouse rent under Section 194-I for FY 2025-26

Section 194-I applies when rent is paid to a resident for the use of land, building, machinery, plant, equipment, furniture or fittings. A commercial warehouse generally falls within the category of land or building, so rent paid for it may attract TDS under this section.

The Income Tax Department’s TDS provisions provide the following key rules for warehouse rent during FY 2025-26:

Particular Rule for FY 2025-26
Relevant assessment year AY 2026-27
Applicable section Section 194-I
Type of payment Rent for land or building, including a warehouse
TDS rate for a resident owner 10%
Annual threshold ₹2,40,000 per payee during the financial year
Return generally used Form 26Q
TDS certificate Form 16A
Person primarily responsible Tenant or other person paying the rent

The threshold applies to the aggregate rent payable or paid to a payee during the financial year. If the annual rent exceeds ₹2,40,000, the payer generally deducts TDS on the applicable rent payments from the point at which the legal requirement applies.

Example of warehouse rent TDS

Suppose a company pays monthly warehouse rent of ₹1,00,000 to a resident owner.

  • Annual rent: ₹12,00,000
  • TDS rate under Section 194-I: 10%
  • Monthly TDS: ₹10,000
  • Net monthly payment to the owner: ₹90,000

The tenant deposits ₹10,000 with the Central Government and reports the payment in its quarterly TDS return. The warehouse owner receives credit for the TDS against the final income tax liability.

Who must deduct TDS on commercial warehouse rent?

The tenant, lessee or payer deducts TDS. A warehouse owner who only receives rent does not normally deduct TDS from the tenant’s payment.

TDS under Section 194-I can apply where the rent is paid by:

  • A company or limited liability partnership
  • A partnership firm
  • A trust or society
  • A government department or local authority
  • An individual or Hindu Undivided Family (HUF) required to undergo tax audit under Section 44AB for the immediately preceding financial year
  • Any other person covered by the withholding provisions

An individual or HUF that is not covered by the tax audit requirement may not have to deduct TDS under Section 194-I merely because it rents a warehouse for business. The payer should examine its own tax status and the nature of the payment before deciding the applicable provision.

What if the warehouse owner is also a business deductor?

A warehouse owner may still have TDS obligations in a different capacity. For example, the owner may need to deduct tax on:

  • Contractor payments for warehouse construction or repairs
  • Professional or technical service charges
  • Salary paid to employees
  • Commission or brokerage
  • Rent paid for a property taken on lease and sublet to another party

In such cases, the warehouse owner becomes a TDS deductor for those payments. The obligation to file a TDS return depends on the payment made by the owner, not merely on the fact that the owner receives warehouse rent.

Warehouse rent TDS rate and threshold for AY 2026-27

For rent paid to a resident warehouse owner, the usual Section 194-I rate is 10% when the payment relates to land or a building.

The annual threshold is ₹2,40,000 per payee for FY 2025-26. The payer should consider the total rent payable to the same owner during the year, including rent under more than one agreement where applicable.

Important points about the threshold

  • The threshold is annual, not a separate fresh limit for every month.
  • The payer should monitor the cumulative rent during FY 2025-26.
  • TDS applies to the rent component and not to unrelated refundable deposits, subject to the terms and substance of the transaction.
  • If a security deposit is adjusted against rent, the adjusted amount may become relevant for TDS.
  • TDS provisions differ where the owner is a non-resident.

Rent paid to a non-resident warehouse owner

If the warehouse owner is a non-resident, Section 195 may apply instead of Section 194-I. The applicable rate, surcharge, health and education cess, documentation and tax treaty position can differ.

The payer should obtain the owner’s residential status and PAN before applying the provision. A resident owner should not be treated as non-resident merely because the owner lives outside India for part of the year. Residential status under Indian income tax law must be determined separately.

Is TDS deducted on GST charged on warehouse rent?

Where the warehouse owner charges Goods and Services Tax (GST) separately on the invoice, TDS is generally calculated on the rent value excluding GST, provided the GST component is clearly shown separately.

For example:

  • Warehouse rent: ₹1,00,000
  • GST shown separately: ₹18,000
  • TDS at 10%: ₹10,000
  • Total invoice: ₹1,18,000
  • Amount paid to owner after TDS: ₹1,08,000

The payer should preserve the tax invoice, agreement and payment records. The treatment may need review if the GST amount is not separately identifiable or if the payment includes composite charges.

The payer should also distinguish income tax TDS under Section 194-I from TDS under GST law. GST TDS is a separate compliance mechanism and does not automatically apply to every private warehouse rent payment.

How to file a quarterly TDS return for warehouse rent

A tenant deducting TDS on warehouse rent generally files Form 26Q. This form reports quarterly tax deductions made from payments other than salary to resident taxpayers.

Step-by-step Form 26Q filing process

  1. Obtain a TAN
    TAN means Tax Deduction and Collection Account Number. A person required to deduct TDS must generally obtain TAN, except in specified cases such as certain transactions covered by Form 26QB.

  2. Collect the owner’s PAN
    Verify the warehouse owner’s name and PAN. A valid PAN helps ensure that the TDS credit appears correctly in Form 26AS and AIS.

  3. Execute and review the rent agreement
    Identify the owner, co-owners, rent amount, escalation clause, maintenance charges, GST and refundable deposit.

  4. Calculate TDS
    Apply the correct rate to the relevant rent payment after considering the annual threshold and applicable GST treatment.

  5. Deduct TDS at the correct time
    For rent paid to a resident, TDS is generally deducted at the time of credit to the owner’s account or payment, whichever occurs earlier.

  6. Deposit the tax
    Deposit the deducted tax using the applicable government challan within the prescribed deadline.

  7. Prepare the quarterly statement
    Report the deductor’s TAN, owner’s PAN, payment details, date of deduction, TDS amount, challan details and Section 194-I code in Form 26Q.

  8. Validate the file
    The return preparation utility and File Validation Utility help identify errors before submission.

  9. Submit the return
    The authorised person can submit the validated statement through the applicable TDS filing channel or a recognised TDS intermediary.

  10. Download Form 16A
    After processing, download the quarterly Form 16A from the TRACES portal and issue it to the warehouse owner.

The TRACES portal provides services for TDS statements, certificates, defaults and related compliance information.

Warehouse owner TDS return due dates for FY 2025-26

The following are the usual quarterly Form 26Q due dates for tax deducted during FY 2025-26:

Quarter Period covered Form 26Q due date
Q1 April to June 2025 31 July 2025
Q2 July to September 2025 31 October 2025
Q3 October to December 2025 31 January 2026
Q4 January to March 2026 31 May 2026

These are the warehouse owner TDS return due dates for FY 2025-26 where the tenant is the deductor. The warehouse owner does not file Form 26Q merely because rent is received.

TDS deposit due dates

For most non-government deductors, TDS is generally deposited by the seventh day of the next month. Tax deducted in March is generally deposited by 30 April.

For example:

  • TDS deducted in June 2025: deposit by 7 July 2025
  • TDS deducted in January 2026: deposit by 7 February 2026
  • TDS deducted in March 2026: deposit by 30 April 2026

The Income Tax Department’s tax deductor guidance should be checked for current filing procedures, challan requirements and system instructions.

Form 16A for warehouse rent

Form 16A is the quarterly TDS certificate issued by the deductor to the warehouse owner. It confirms the amount of rent reported, TDS deducted and TDS deposited against the owner’s PAN.

The warehouse owner should check Form 16A for:

  • Correct PAN and name
  • Correct assessment year
  • Correct quarter
  • Rent amount reported
  • TDS amount
  • TAN of the deductor
  • Challan details
  • Section code and date of payment

If the certificate contains an error, the owner should contact the tenant and request a correction statement. The tenant may need to file a revised Form 26Q before the corrected certificate becomes available.

TDS on rent paid to warehouse owner and Form 26AS

The tenant reports the TDS using the warehouse owner’s PAN. After processing, the credit should appear in:

  • Form 26AS, the tax credit statement linked to the PAN
  • AIS, which provides broader reported financial information
  • Form 16A issued through the TDS system

The owner should reconcile the following three records:

  1. Rent recorded in the books
  2. TDS shown in Form 16A
  3. TDS credit appearing in Form 26AS or AIS

The owner can claim the TDS as credit while filing the income tax return for AY 2026-27. The gross rent should generally be reported as rental or business income according to the facts and the manner in which the warehouse is exploited. TDS is not a final tax on rent. It is a credit against the owner’s final tax liability.

What if TDS does not appear in Form 26AS?

Common reasons include:

  • Tenant entered an incorrect PAN
  • Tenant quoted an incorrect assessment year
  • Tenant failed to deposit the TDS
  • Form 26Q was not filed
  • The return contains a challan or statement error
  • The payment remains unmatched in the TDS system

The owner should first ask the tenant for the filed statement and Form 16A. If required, the tenant should correct the PAN, challan or payment details through a correction statement.

TAN registration and TDS compliance for warehouse rental business

A person required to deduct TDS under Section 194-I should apply for TAN in Form 49B. TAN applications can be made through the online process or prescribed service centres. The TAN must be quoted on:

  • TDS challans
  • Form 26Q
  • TDS certificates
  • Correspondence relating to TDS
  • Other prescribed TDS documents

A warehouse rental business should maintain a compliance calendar covering:

  • Rent agreements and invoices
  • Owner PAN and residential status
  • Monthly TDS calculations
  • GST charged separately
  • Challan payment dates
  • Quarterly Form 26Q deadlines
  • Form 16A issuance
  • Form 26AS and AIS reconciliation
  • Notices and defaults visible on the TDS portal

Consequences of late or incorrect TDS compliance

Late compliance can create interest, late filing fees and other consequences. Common exposures include:

  • Interest for late deduction
  • Interest for late deposit after deduction
  • Late filing fee under Section 234E, subject to the statutory limit
  • Penalties for incorrect or delayed statements
  • Disallowance risk for certain business expenditure where TDS was required but not properly complied with
  • Difficulty for the warehouse owner in claiming TDS credit

The payer should correct errors quickly rather than waiting until the income tax return filing season.

Common questions about warehouse rent TDS

Does the warehouse owner file Form 26Q?

Usually, no. The tenant or person paying the warehouse rent files Form 26Q. The owner files a TDS return only when the owner deducts TDS on payments made by the owner, such as contractor or professional fees.

Is TDS applicable to warehouse rent below ₹2,40,000?

Generally, Section 194-I does not require TDS where the total rent payable to a payee during FY 2025-26 does not exceed ₹2,40,000. The payer should still examine whether another provision applies to the payment.

Which form is used for warehouse rent TDS?

For rent paid to a resident warehouse owner under Section 194-I, the tenant generally uses Form 26Q for the quarterly return and issues Form 16A to the owner.

Can the warehouse owner claim TDS without Form 16A?

The owner can check the TDS credit in Form 26AS or AIS and claim eligible credit, but Form 16A remains important supporting evidence. The owner should request it from the tenant if it has not been issued.

Is Form 26QB used for warehouse rent?

Form 26QB generally relates to specified property rent payments by certain individuals or HUFs under Section 194-IB. It should not be confused with regular Section 194-I compliance, where the deductor generally files Form 26Q.

Final checklist for AY 2026-27

For the tenant or TDS deductor

  • Confirm whether Section 194-I applies.
  • Check the resident status and PAN of the warehouse owner.
  • Apply the 10% rate for rent covered by Section 194-I.
  • Monitor the ₹2,40,000 annual threshold.
  • Exclude separately shown GST when calculating TDS, where applicable.
  • Deposit TDS on time.
  • File quarterly Form 26Q.
  • Issue Form 16A.
  • Correct errors promptly.

For the warehouse owner

  • Give the correct PAN and bank details to the tenant.
  • Collect Form 16A every quarter.
  • Reconcile TDS with Form 26AS and AIS.
  • Report the rental income correctly in the AY 2026-27 return.
  • Claim the TDS credit only after checking the reported amount.
  • Maintain the rent agreement, invoices, GST records and bank statements.

The key point about TDS filing by a warehouse owner in AY 2026-27 is that the owner normally receives the TDS credit rather than filing Form 26Q. For TDS on warehouse rent under Section 194-I for FY 2025-26, the tenant generally deducts 10% when annual rent exceeds ₹2,40,000, files Form 26Q, and issues Form 16A. The owner should focus on accurate income reporting, Form 26AS reconciliation and timely follow-up with the tenant for TDS filing by warehouse owner for AY 2026-27 compliance.

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