Rent agreement in India: 11-month vs. lease, TDS and deposits

The "11-month rule" is the backbone of Indian rental practice. Here's why it exists and when to break it.

Why 11 months

Under the Registration Act 1908, leases over 12 months must be registered with stamp duty based on total rent + deposit. 11-month agreements sidestep this, saving 6-10K in Bengaluru and more in Mumbai.

When to register a full lease

Long-term corporate rentals, commercial leases, or when the tenant specifically asks for it (often for HRA / tax reasons). Registered leases are stronger in court.

TDS on rent

Under Section 194-IB, a tenant paying > ₹50,000/month to an individual owner must deduct 5% TDS on the last month's rent. Form 16C certificate must be issued to the owner.

Deposit rules vary by state

Karnataka: 10 months common. Delhi: 2-3 months. Maharashtra: 6 months cap under the Maharashtra Rent Control Act for residential.

Safety checklist for everyone in this deal

A property transaction in India touches a lot of hands. Here's what each party should insist on before money moves.

Buyers

• Verify title through a 30-year EC (Encumbrance Certificate) and cross-check the mother deed.
• Confirm RERA registration (where applicable) — the RERA number should match the one on the state RERA website.
• Never transfer a token amount on WhatsApp alone; insist on a receipt and a simple written agreement.
• Walk the property in person. Photo-only deals are a common vector for listing fraud.

Sellers

• Keep originals in a locker. Only ever share certified copies with prospective buyers.
• Insist on payment via cheque / NEFT / RTGS — avoid cash-heavy deals, especially above ₹2 lakh (20,000 cash cap for each leg under Section 269ST).
• Never hand over vacant possession until the sale deed is registered and the registration receipt is in your hand.

Agents, agencies and brokers

• Register under the state RERA (where brokering RERA-covered projects) and display your registration number on listings.
• Keep a written, dated engagement letter with the client covering brokerage %, exclusivity and a cancellation clause.
• Do a KYC on both sides before the first site visit — PAN + Aadhaar, photo ID match — and hold a copy on file.
• Never pocket earnest money directly; let it flow buyer ↔ seller and invoice the brokerage separately.

Owners

• Update your property tax every year — BBMP / MCD / BMC arrears follow the property and surface at sale time.
• On rental, include a 2–3-month notice period, a detailed inventory with photos, and a clause on painting + deep-cleaning at exit.
• Pay the rental TDS if you're a tenant paying over ₹50,000/month (Section 194-IB). Owners should chase the Form 16C from their tenant.

Final tip: when in doubt, walk away. The best real-estate deals are the ones you don't rush.