Section 194I : TDS on Rent payment

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Hiral Vakil

TDS Sections

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 Rs. 1,80,000. However, in case where the gross receipts or total sales or turnover of the previous year exceeds the monetary limits by way of business or profession provided u/s 44AB ( ie 1cr in case of business and 25 lakhs in case of profession) then both the Individual or the HUF shall be responsible to deduct TDS on the payment of Rent.

When to deduct TDS under section 194I?

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 :

  1. The date of actual payment of cash or
  2. The date of issue of cheque, draft or by any other mode, whichever is Earlier.

It shall also be noted that when any payment to be made to the landlord is credited to a “Suspense Account” or any other account by whatever name called in the payer’s books of account, it shall be considered as deemed payment and tax has to be deducted on such amount.

TDS Rates under section 194I

Nature of Payment TDS Rate
Rent on plant or machinery or equipment 2%
Rent on land or building or furniture or fittings 10%

In a case where no PAN is provided by the landlord, the TDS shall be deducted at the rate of 20%.

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 any:

How to deduct TDS on Rent payment?

TDS Return for non-salary payments (Form 26)
Need to file your Form 26Q? Let us help you out
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TDS Return for non-salary payments (Form 26)
Need to file your Form 26Q? Let us help you out
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When to deposit TDS under section 194I?

When the payment of rent is made during the month of April to February, it should be deposited to the government on or before 7th of the next month. And for tax deducted in the month of march should be deposited on or before 30th day of April.

How to apply threshold limit in case of rent paid to co-owners?

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.

What is the point of deduction of TDS u/s 194I?

Tax should be deducted either at the time of actual payment of rent or at the time of its credit to the account of the payee whichever is earlier.

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