Section 194I · TDS on payment of rent
Paying rent of over ₹2.4 lakh a year? You're a tax deductor.
- Threshold
- ₹2,40,000 per year
- Land / building / furniture
- 10%
- Plant & machinery
- 2%
- Individuals paying personal rent
- Use 194-IB (5%)
In plain English
If you're in business or in a profession and pay rent of more than ₹2,40,000 in a year, the law makes you withhold TDS — 2% on plant/machinery rent and 10% on land, building or furniture rent. Salaried individuals paying personal rent fall under a different (lighter) provision, 194-IB.
| Meaning | Number |
|---|---|
| Threshold | ₹2,40,000 per year |
| Land / building / furniture | 10% |
| Plant & machinery | 2% |
| Individuals paying personal rent | Use 194-IB (5%) |
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
- Personal rent by salaried/Individuals — Not 194-I — use 194-IB at 5%
What this section covers
Section 194-I requires every person, other than an individual or HUF not liable to tax audit, paying rent to a resident to deduct TDS at 2% on rent for plant, machinery or equipment, and 10% on rent for land, building (including factory building) or furniture & fittings. TDS applies only if the aggregate rent during the financial year exceeds ₹2,40,000. Where rent is paid by an individual or HUF (not in business) — i.e., personal rent — Section 194-IB at 5% applies instead, with its own threshold (₹50,000 per month). 'Rent' is defined widely to cover any payment for use of property, even by lease, sub-lease or tenancy. Service tax / GST charged separately is generally excluded from the base.
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 unified TDS section | |
| Notes | Restated within Section 393 under the Income-tax Act, 2025 alongside the rest of the TDS code. The 2% / 10% rates and the ₹2,40,000 threshold are retained. | |
Common confusion
194-I is for business deductors. If you are a salaried individual paying rent above ₹50,000 a month to a landlord, you fall under 194-IB at 5% — not 194-I.
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.