TDS on commercial rent: the 4% rule nobody invoices for

If you rent an office, shop or showroom in Bangladesh, the Income Tax Act 2023 puts a withholding duty on you — not on the landlord. Section 128 requires commercial tenants to deduct 4% from monthly rent and deposit it with the government. Here is how it works, and why most tenants discover it only during an audit.

Who withholds, at what rate

• Commercial rent — 4% deducted at source by the tenant (§128).
• Residential rent — 10% when annual rent crosses ৳36,00,000 (§109).

Both are advances on the landlord's tax liability. The tenant files the withholding via a challan and issues a TDS certificate (Form 12BB class) to the landlord, who claims it as a credit at assessment.

What goes wrong in practice

• Tenant pays full rent and never deducts — the whole year's TDS becomes the tenant's own liability, plus interest and penalty.
• Landlord's return doesn't show rental income but tenant filed TDS — triggering a mismatch notice and a routine inquiry.
• Advance rent or security deposits are sometimes treated as rent; only refundable deposits are outside the TDS net.

How KRTaker handles it

Every commercial lease in KRTaker carries a TDS flag. Invoices are generated at gross rent, TDS is computed at 4%, and the net payable is what the tenant sees. At month-end, KR produces the exact challan figures per tenant — so your accounts team stops reconciling spreadsheets.

Run the TDS calculator →