Section 194I states that if any person has paid rent during the year and if it exceeds the specified limit then the person is liable to deduct tax at source. It generally includes rent for land, buildings, furniture & fittings, plant & machinery, etc.
What is Section 194I?
As per provisions of section 194I, any person (other than an individual or a HUF) is liable to deduct TDS on rent paid to a resident, if the amount of rent paid/credited during the financial year exceeds INR 2,40,000. However, in the case where the gross receipts or total sales or turnover of the previous financial year exceeds the monetary limits by way of business or profession provided u/s 44AB i.e. (1 crore in case of business and 50 lakhs in case of profession) then both the Individual or the HUF shall be responsible to deduct TDS on the payment of Rent.
NOTE: If the Individuals and HUF (other than those covered under audit) are paying rent of INR 50,000 or more per month to the landlord then they are liable to deduct TDS u/s 194IB.
What is the meaning of “Rent” under Section 194I?
As per section 194I, rent means any payment made under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any:
- Land
- Building
- Plant
- Machinery
- Furniture
- Fittings
- Equipment
Rate of TDS u/s 194I
| Section | Nature of payment | TDS Rate |
| 194I(a) | Rent on the hiring of plant & machinery | 2% |
| 194I(b) | Rent on other than Plant & machinery | 10% |
- No Surcharge and Health & Education cess will be levied on the above TDS rates.
- If the deductee has not quoted their PAN the rate of TDS will be 20%.
When to deduct TDS?
The TDS shall be deducted at the time of credit of such rent income to the payee account or at the time of payment, whichever is earlier. The payment date shall be either :
- The date of actual payment of cash or
- The date of issue of cheque, draft, or by any other mode, whichever is earlier.
Exceptions u/s 194I
- If the payee is a Government agency then no TDS needs to be deducted.
- The payment by an assessee for the usage of lounge space at the airport is not liable for TDS u/s 194I. It is being considered as a Work contract and tax is to be deducted u/s 194C.
- If the landlord receives security or advance amount from the tenant which is refundable at the time of vacating the premise then no TDS needs to be deducted from such amount.
TDS Return
If the deductor has deducted tax on the amount of rent then they are liable to file a quarterly return of TDS in Form 26Q. For filling out this form the deductor is required to obtain TAN.
FAQs
Where the share of each co-owner in the property is definite and ascertainable, the limit of Rs. 2,40,000 will be applicable to each co-owner separately.
Under section 194I tax needs to be deducted only from the amount of rent which should be exclusive of GST.
If the TDS is not been deducted, penalty interest @ 1% shall be applicable per month, till the date TDS is deducted.
Hey @Dia_malhotra
As per section 194A, TDS on interest other than interest on securities is required to be deducted by any person other than Individual or HUF at the rate of 10%, when paid to a resident. No surcharge, education cess or SHEC shall be added to the above rate.
Hope this helps!
Hey @HarishMehta
TDS u/s 194J needs to be deducted by deductor other than an individual or a HUF, @ 10% on any amount paid or payable to any which is in excess of INR 30,000 as:
Hope this helps!
Hello @the_AK,
Against gross income, you can claim business expenses that you have incurred for earning that income. So you can claim this service fee as a business expense from the gross income received by you.
Hope this helps!
Hey @Bharti_Vasvani can you please help here?
Hello @Anuj_Agarwal,
TDS will be deducted by the company when the interest is actually paid on the securities, so at that time whoever is the owner of such security shall receive the interest and can claim credit of interest.
Hope this helps!
Hey @Anuj_Agarwal,
You can check out this article for more clarity:
Hope this helps!
I have respectable salary income and 1000 insurance commission…ie old commission…not claiming any expenses…can i show it as other income in itr1 or have to file itr 3
Hi @Shivam_B
If you have income from salary and income from insurance commission (business income), then you will be required to file ITR 3.
Itr 3 is so big…have to pay heavy charges…for filing…will it be defective if i do so ie reporting 1000 as other income in itr1 along with salary income…have closed down the insirance work since yesrs…i even contacted commssiom giving broker and closed my commission account…still they are showing in 26as wheress i am not receiving in real
Hi @Shivam_B
As per the recent utilities, ITD gives you the option to select only the schedules applicable to you while filing ITR.
Thus, you are not required to go through the entire ITR 3 form. You can also prepare and file ITR on Quicko, where you can upload form 16 and add commission income under the head “Business & Profession” and file ITR 3, without any charges as Quicko is a DIY platform helping individuals to file taxes.