TDS On Rent u/s 194I, Form 26Q — Explained

TDS On Rent u/s 194I, Filing Form 26Q — Explained

Rent means any payment for the use of land or building or land apartment to building or plant or machinery or equipment or furniture or fittings.

This document covers

What is Rent?
Persons responsible to deduct TDS (Deductor)
Rate of TDS
Threshold for deduction u/s 194I-Rent
Time of Deduction of TDS
Due Date for TDS Payment
TDS Returns
Lower deduction /Nil deduction of TDS

1. What is Rent?

Rent means any payment for the use of land or building or land apartment to building or plant or machinery or equipment or furniture or fittings.
Rent is also known as lease, sub lease, tenancy or any other agreement.
Section 194I of Income Tax Act 1961 deals with TDS on Rent

2. Persons responsible to deduct TDS (Deductor)

Any person other than individual/HUF whose total sales or turnover from the business does not exceeds Rs 1 crore in case of business and Rs 50 lakhs in case of profession are required to deduct TDS u/s 194-I on the rental payments

Note 1 : TDS u/s 194I needs to be deducted only on the rental payments made to Resident Landlords. Section 195 deals with payments to NRI's.

Note 2 : Individuals or HUF who are paying a rent of Rs 50,000 or more are required to deduct TDS @ 5% (w.e.f 01st Oct 2024 — 2%) u/s 194IB and need to file form 26QC. Kindly refer TDS On Rent u/s 194-IB, Filing Form 26QC Explained for more information

3. Rate of TDS

The TDS needs to be deducted at following rates

Plant, Machinery or Equipment: 2%
Land or Building or furniture or fittings: 10%

4. Threshold for deduction u/s 194I-Rent

The TDS on rent needs to be deducted only if the amount or aggregate of amounts paid to a person during the financial year exceeds Rs 2,40,000

NEW NOTE

As per Budget 2025, TDS on rent needs to be deducted if the amount or aggregate of amounts paid to a person during the financial year exceeds Rs 6,00,000

5. Time of Deduction of TDS

TDS u/s 194-I needs to be deducted at the following times which ever is earlier

At the time of credit of amount to Payee
At the time of payment of amount to Payee

6. Due Date for TDS Payment

The due date for payment of TDS deducted u/s 194I is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30

7. TDS Returns

TDS Returns needs to be filed in Form 26Q for all persons except the individuals or HUF who are not liable to Audit
TDS Return filing is Quarterly
The due dates for the TDS Returns are as follows
- April to June — July 31
- July to September — October 31
- October to December — January 31
- January to March — May 31
TDS Certificates needs to be issued within 15 days from the date of filing in Form 16A

8. Lower deduction /Nil deduction of TDS

The Payee can apply for lower deduction or nil deduction of TDS in Form 13 and submit the certificate to deductor for non-deduction or lower deduction of TDS