Section 194I-TDS on Rent


  • 1.Deductor- Any person, [other than individual or HUF (not liable to tax audit in the preceding Financial year)]
  • 2. Deductee- Any Resident
  • 3. Time of Deduction- At the time of credit or payment, whichever is earlier.
  • 4. Rate of TDS-
    • -For use of Plant & Machinery- 2%
    • -For use of Land, Building, Furniture or fitting- 10%
  • 5. No deduction shall be made under this section where the amount of such income credited or paid does not exceed Rs. 1,80,000.
  • 6. Where the share of each co-owner in the property is definite and ascertainable, the limit of Rs. 1,80,000 will be applicable to each co-owner separately.
  • 7. An individual or HUF, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section.
  • 8. CBDT Circulars regarding section 194-I
    • -Section 194I is not applicable on remittance of passenger service fee by an airline to an airline operator- Circular No. 21/2017
    • -TDS is required to be deducted on advance payment of rent- Circular No. 5/2001
    • -If municipal taxes, ground rent etc. are borne by the tenant, no TDS will be deducted under section 194I- Clarifications from CBDT
    • -Section 194I is applicable in case of non-refundable deposit made by tenant. Further, if the deposit carries interest, tax is required to be deducted on the amount of interest under section 194I.
    • -No TDS is required at the time of payment of security deposit since it cannot be treated as advance rent. However, TDS has to be deducted when the security deposit has been adjusted.
    • -Section 194I is not applicable to the cooling charges paid by the customer of the cold Storage- Circular No. 1/2008