Section 194I · TDS on payment of rent
Paying rent of over ₹2.4 lakh a year? You're a tax deductor.
- Threshold (FY 2025-26)
- ₹50,000 per month or part
- Land / building / furniture
- 10%
- Plant & machinery
- 2%
- 194-I vs 194-IB
- Depends on payer category
In plain English
If you pay rent as a business or professional, for FY 2025-26 you deduct TDS once rent crosses ₹50,000 for a month (or part of a month) — 2% on plant/machinery rent and 10% on land, building or furniture rent. Some individuals and HUFs fall under 194-IB instead — which one applies depends on the payer's statutory category, not simply on whether the rent is personal.
| Meaning | Number |
|---|---|
| Threshold (FY 2025-26) | ₹50,000 per month or part |
| Land / building / furniture | 10% |
| Plant & machinery | 2% |
What counts as 'rent' under 194-I
- Office / shop / godown rent — 10% TDS on rent for building
- Plant, machinery, equipment hire — 2% TDS
- Furniture & fittings — Part of the 10% category if leased with premises
- Cold storage / warehousing charges — Generally covered as rent for use of building
- Rent paid by individuals / HUFs — May fall under 194-IB instead — depends on the payer's statutory category
What this section covers
Section 194-I applies to rent paid to residents by deductors within its scope. Rates: 2% for plant, machinery or equipment; 10% for land, building or furniture & fittings. For FY 2025-26 the threshold is ₹50,000 per month or part of a month — not an annual ₹2,40,000 or ₹6,00,000 test. Individuals/HUFs outside 194-I's scope may instead fall under 194-IB, depending on their statutory category. (Before 1 Apr 2025 the threshold was ₹2,40,000 a year.)
Read the legal text
“Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof… deduct income-tax thereon at the rate of— (a) two per cent for the use of any machinery or plant or equipment; and (b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings…”
Old Act vs New Act
| Aspect | Act, 1961 | Act, 2025 |
|---|---|---|
| Section | 194I | 393 |
| Topic | TDS on payment of rent | |
| Verdict | Consolidated under Section 393 — threshold reviewed | |
| Notes | Under the Income-tax Act, 2025 rent TDS is part of the consolidated Section 393 (Section 393(1) Table Sl. 2(ii)). The ₹50,000-per-month threshold already applied under the 1961 Act from 1 Apr 2025. | |
Common confusion
Whether 194-I or 194-IB applies depends on the deductor's statutory category (for example, individuals/HUFs outside 194-I's scope), not simply on whether the rent is 'personal'. Check the conditions of each section.
Who should know this
Related sections
Based on the official Income-tax Act, 1961 and the published Income-tax Act, 2025 as available on the Income Tax Department website. Always verify against the published Act and consult a qualified professional.
What was checked
194I → 393(1) Table Sl. 2(ii): FY 2025-26 (1961 Act) threshold only. Table row checked against s.393 (current text). TDS rates & thresholds — FY 2025-26 (TRACES)
Related official updates