{"id":7410,"date":"2025-07-03T12:25:32","date_gmt":"2025-07-03T12:25:32","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7410"},"modified":"2025-07-03T12:25:36","modified_gmt":"2025-07-03T12:25:36","slug":"section-194i-tds-on-rent","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/section-194i-tds-on-rent\/","title":{"rendered":"Section 194I &#8211; TDS on Rent"},"content":{"rendered":"<h2 id=\"what-is-section-194i\" class=\"wp-block-heading\">What is Section 194I?<\/h2>\n\n\n\n<p>Section 194I of the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax-act\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax Act<\/a> mandates that certain individuals and entities deduct <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Tax<\/a> Deducted at Source (<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tds\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>TDS<\/a>) when paying rent to a resident. This ensures that tax is collected at the source of income.<\/p>\n\n\n\n<h2 id=\"applicability\" class=\"wp-block-heading\">Applicability<\/h2>\n\n\n\n<p>TDS under Section 194I applies when:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The annual rent exceeds &#x20B9;2,40,000<\/strong>.<\/li>\n\n\n\n<li><strong>The payer is<\/strong>:\n<ul class=\"wp-block-list\">\n<li>A company or firm.<\/li>\n\n\n\n<li>An individual or Hindu Undivided Family (HUF) subject to tax audit under Section 44AB in the preceding financial year.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 id=\"definition-of-rent\" class=\"wp-block-heading\">Definition of Rent<\/h2>\n\n\n\n<p>Under Section 194I, &#x2018;rent&#x2019; includes payments made under lease, sub-lease, tenancy, or any agreement for the use of:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Land or building (including factory buildings).<\/li>\n\n\n\n<li>Land appurtenant to a building.<\/li>\n\n\n\n<li>Machinery, plant, or equipment.<\/li>\n\n\n\n<li>Furniture or fittings.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"tds-rates\" class=\"wp-block-heading\">TDS Rates<\/h2>\n\n\n\n<p>The TDS rates under Section 194I are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>2%<\/strong> for rent on plant, machinery, or equipment.<\/li>\n\n\n\n<li><strong>10%<\/strong> for rent on land, building, furniture, or fittings.<\/li>\n<\/ul>\n\n\n\n<p><em>Note<\/em>: If the landlord does not furnish their PAN, TDS is deducted at 20% under Section 206AA. <\/p>\n\n\n\n<h2 id=\"how-to-calculate-tds-on-rent\" class=\"wp-block-heading\">How to Calculate TDS on Rent<\/h2>\n\n\n\n<p><strong>Example<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Monthly Rent<\/strong>: &#x20B9;60,000<\/li>\n\n\n\n<li><strong>Annual Rent<\/strong>: &#x20B9;60,000 &#xD7; 12 = &#x20B9;7,20,000<\/li>\n\n\n\n<li><strong>Since &#8377;7,20,000 &gt; &#8377;2,40,000<\/strong>, TDS is applicable.<\/li>\n\n\n\n<li><strong>Type of Asset<\/strong>: Building.<\/li>\n\n\n\n<li><strong>Applicable TDS Rate<\/strong>: 10%.<\/li>\n\n\n\n<li><strong>Monthly TDS<\/strong>: &#x20B9;60,000 &#xD7; 10% = &#x20B9;6,000<\/li>\n\n\n\n<li><strong>Net Payment to Landlord<\/strong>: &#x20B9;60,000 &#x2013; &#x20B9;6,000 = &#x20B9;54,000<\/li>\n<\/ul>\n\n\n\n<h2 id=\"time-of-deduction-and-payment\" class=\"wp-block-heading\">Time of Deduction and Payment<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>When to Deduct<\/strong>: At the time of credit or payment, whichever is earlier.<\/li>\n\n\n\n<li><strong>When to Deposit<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>For Non-Government Deductors<\/strong>: By the 7th of the following month.<\/li>\n\n\n\n<li><strong>For March Deductions<\/strong>: By April 30th.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 id=\"compliance-requirements\" class=\"wp-block-heading\">Compliance Requirements<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>TDS Certificate<\/strong>: Issue <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/form-16a\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Form 16A<\/a> to the landlord within 15 days of filing the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tds-return\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">TDS return<\/a>.<\/li>\n\n\n\n<li><strong>TDS Return<\/strong>: File quarterly TDS returns in <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/form-26q\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Form 26Q<\/a>.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"consequences-of-non-compliance\" class=\"wp-block-heading\">Co<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nse\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>nse<\/a>quences of Non-Compliance<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Failure to Deduct TDS<\/strong>: Interest at 1% per month from the date tax was deductible to the date it is deducted.<\/li>\n\n\n\n<li><strong>Failure to Deposit TDS<\/strong>: Interest at 1.5% per month from the date of deduction to the date of deposit.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"exemptions\" class=\"wp-block-heading\">Exemptions<\/h2>\n\n\n\n<p>TDS under Section 194I is not applicable when:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rent paid does not exceed &#x20B9;2,40,000<\/strong> in a financial year.<\/li>\n\n\n\n<li><strong>Rent is paid to the government or certain specified entities<\/strong>.<\/li>\n\n\n\n<li><strong>Rent is for agricultural land<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>Understanding and complying with Section 194I ensures smooth financial operations and adherence to tax regulations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Section 194I? Section 194I of the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax<\/a> Act mandates that certain individuals and entities deduct Tax Deducted at Source (TDS) when paying rent to a resident. This ensures that tax is collected at the source of income. Applicability TDS under Section 194I applies when: Definition of Rent Under Section 194I, &#x2018;rent&#x2019; includes [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7410","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7410","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7410\/revisions"}],"predecessor-version":[{"id":7412,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7410\/revisions\/7412"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}