What is the threshold limit for TDS on rent under 194I?

The threshold limit under Section 194I is ₹50,000 per month or part of a month. TDS is deducted when the rent payment for any month exceeds ₹50,000.

What is Section 194IB – TDS on rent by individuals?

Section 194IB covers TDS on rent paid by individuals or HUF who are not liable to tax audit under Section 44AB. The TDS rate is 2% on rent above ₹50,000 per month. This is separate from Section 194I which applies to specified persons like companies and audit-required taxpayers.

Section 194I TDS Rate on Rent FY 2025-26

Q: What is the TDS rate on rent under Section 194I?

Under Section 194I, TDS on rent for land, building, or furniture/fittings is 10%. TDS on rent for plant and machinery is 2%. The threshold limit is ₹50,000 per month (or part thereof).

194I vs 194IB

Section 194I vs Section 194IB – Key Differences

Two different sections cover TDS on rent depending on who is paying.

Section 194I

Who deductsCompanies, firms, audit-required persons

Rate (Land/Building)10%

Rate (Plant/Machinery)2%

Threshold₹50,000 per month

When to deductAt time of credit or payment

Section 194IB

Who deductsIndividuals/HUF NOT liable to tax audit

Rate (Land/Building)2%

Rate (Plant/Machinery)N/A

Threshold₹50,000 per month

When to deductLast month of tenancy / March

Section 194I Rate Chart

Complete TDS Rate Table – Section 194I FY 2025-26

Section	Nature of Rent Payment	Threshold (₹)	Individual/HUF (%)	Co./Firm (%)	No PAN (%)
Section 194I – TDS on Rent (Specified Persons)
194I(a)	Rent of Plant, Machinery or Equipment	₹50,000/month	2%	2%	20%
194I(b)	Rent of Land, Building, Furniture or Fittings	₹50,000/month	10%	10%	20%
Section 194IB – TDS on Rent by Individual / HUF (Non-Audit)
194IB	Rent of Land, Building or Furniture paid by Individual/HUF not liable to tax audit	₹50,000/month	2%	N/A	20%
Section 194IC – TDS on Joint Development Agreements
194IC	Monetary consideration paid to landowner under Joint Development Agreement	No Limit	10%	10%	20%
Section 194IA – TDS on Immovable Property Purchase
194IA	Transfer of immovable property (other than agricultural land)	₹50,00,000	1%	1%	20%

📌 Important Notes – Section 194I

Note 1The threshold of ₹50,000 is per month (or part of a month). TDS must be deducted at the time of credit to the landlord's account or actual payment — whichever is earlier.

Note 2Under Section 194IB, TDS for the entire year is deducted in the last month of the tenancy or in March (whichever comes first). TDS is deposited using Form 26QC.

Note 3Rent paid to a government entity (Central/State Government) is exempt from TDS under Section 194I.

Note 4If the landlord provides a certificate under Section 197 (lower TDS), TDS should be deducted at the rate specified in the certificate, not the standard rate.

Note 5For composite rent (land + building + furniture as a single amount), TDS applies at 10% on the entire amount since the land/building rate governs the composite payment.

Practical Examples

Worked Examples – Section 194I TDS Calculation

🏢 Example 1 — Office Rent (Company paying)

Monthly Rent₹1,50,000

TypeBuilding / Premises

TDS Rate (Sec 194I)10%

Monthly TDS₹15,000

Net Rent Paid₹1,35,000

🏭 Example 2 — Machinery Rent

Monthly Rent₹80,000

TypePlant / Machinery

TDS Rate (Sec 194I)2%

Monthly TDS₹1,600

Net Rent Paid₹78,400

🏠 Example 3 — Individual Paying Rent (Sec 194IB)

Monthly Rent₹55,000

Section194IB (Individual/HUF)

TDS Rate2%

Annual TDS (deducted in March)₹13,200

Form for DepositForm 26QC

🏗️ Example 4 — Property Purchase (Sec 194IA)

Property Value₹75,00,000

Section194IA

TDS Rate1%

TDS Amount₹75,000

Net Payment to Seller₹74,25,000

FAQ

Frequently Asked Questions – Section 194I TDS on Rent

Under Section 194I for FY 2025-26: TDS on rent for land, building, or furniture/fittings is 10%. TDS on rent for plant and machinery is 2%. If the payee does not furnish PAN, TDS is deducted at 20% under Section 206AA.

No. Security deposit is refundable and does not constitute income to the landlord. TDS under Section 194I does not apply to refundable security deposits. TDS applies only to the rent amounts — periodic payments made for use of the property.

Specified persons are required to deduct TDS under Section 194I: Central/State Government, companies, firms, co-operative societies, local authorities, trusts, universities, and individuals/HUF whose accounts are required to be audited under Section 44AB (i.e., turnover above the tax audit threshold). Non-audit individuals and HUFs paying rent are covered under the separate Section 194IB.

Section 194I applies to specified persons (companies, firms, audit-required taxpayers) paying rent above ₹50,000 per month. The rate is 10% for building and 2% for machinery. Section 194IB applies specifically to individuals and HUF NOT liable to tax audit, paying rent above ₹50,000 per month. The rate under 194IB is 2% (reduced from 5% as per Finance Act 2025 amendments). TDS under 194IB is deducted once a year (in the last month) using Form 26QC.

If the rental agreement specifies a composite rent amount (including maintenance), TDS applies to the full amount at the applicable rate. If maintenance charges are separately invoiced and relate to a service (not rent), they may be covered under Section 194C (if contracted work) or 194J instead. It is advisable to have separate invoices for rent and maintenance to clarify the applicable TDS provision.

Related Sections

Explore Other TDS Sections

Section 194C

TDS on contractor and sub-contractor payments

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Section 194J

TDS on professional fees and technical services

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Full TDS Rate Chart

All 28+ TDS sections for FY 2025-26 in one page

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Section 194I TDS on Rent – Complete Reference FY 2025-26

Section 194I TDS rate for FY 2025-26 is 10% on rent for land, building and furniture and 2% on rent for plant and machinery. The TDS on rent threshold under Section 194I is ₹50,000 per month. Section 194IB TDS on rent applies to individuals and HUF not liable to tax audit, at 2% on monthly rent exceeding ₹50,000. The 194I threshold limit FY 2025-26 and TDS on building rent rates are as per the Finance Act 2025. TDS on property purchase 194IA is 1% when the transaction value exceeds ₹50 lakhs.

Section 194I – TDS on Rent
FY 2025-26 (AY 2026-27)