TDS on Rent: Section 194-I
Once payments to one payee cross ₹6,00,000 in a financial year, 10% or 2% comes off before the money moves. Here's the whole rule, with a calculator.
The rate right now · TY 2026-27
| Rates | 10% Rent of land, building or furniture 2% Rent of plant, machinery or equipment |
|---|---|
| Annual threshold | ₹6,00,000 per payee, per financial yearThreshold ₹50,000 per month (₹6,00,000/yr) from 1-4-2025; was ₹2,40,000/yr earlier. |
| Effective from | 1 April 2025 |
| Who deducts | Any person (other than individuals/HUF not under tax audit) paying rent above the threshold. |
| Who's covered | Landlords of land, buildings, plant, machinery, equipment, furniture. |
| Under the Act 2025 | Rent TDS is consolidated into the Section 393 payment-code table of the 2025 Act. |
Rates per Section 194-I, Income-tax Act 1961, as amended by the Finance Act, 2025 · verified 1 July 2026
Work out the TDS on a payment
TDS to deduct
₹0
The split
| Payment for the year | ₹1,20,000 |
| TDS @ 10% (not triggered) | − ₹0 |
| Net receipt | ₹1,20,000 |
Once the year's total crosses the threshold, TDS applies to the whole amount, not just the part above it. Without the payee's PAN, deduction jumps to 20% under the higher-of rule. Threshold ₹50,000 per month (₹6,00,000/yr) from 1-4-2025; was ₹2,40,000/yr earlier. Runs in your browser; nothing is stored.
What changed
As of 1 April 2025, the annual threshold is up from ₹2,40,000 to ₹6,00,000. Threshold ₹50,000 per month (₹6,00,000/yr) from 1-4-2025; was ₹2,40,000/yr earlier. Below the threshold nothing is deducted; cross it and TDS applies to the whole amount, not just the excess.
Rate history
| Period | Rate | Threshold | Set by |
|---|---|---|---|
| 1 Apr 2019 – 31 Mar 2025 | 10%Rent of land, building or furniture | ₹2,40,000 | Finance Act, 2019† |
| From 1 Apr 2025Current | 10%Rent of land, building or furniture | ₹6,00,000 | Finance Act, 2025† |
| From 1 Apr 2025Current | 2%Rent of plant, machinery or equipment | ₹6,00,000 | Finance Act, 2025† |
Effective-dated from Finance Acts as notified in the Gazette of India · sources below
How Section 194-I TDS works
TDS flips the collection point. Instead of the person earning the money paying tax months later, the payer holds back 10% or 2% at the moment of payment and deposits it with the government against the payee's PAN. The payee sees that credit in their Form 26AS and settles only the balance when they file. Here's how that plays out under Section 194-I:
- Who deducts. Any person (other than individuals/HUF not under tax audit) paying rent above the threshold.
- Who's on the receiving end. Landlords of land, buildings, plant, machinery, equipment, furniture.
- When it triggers. At credit or payment, whichever comes first. Once the year's running total for a payee crosses ₹6,00,000, tax comes off the whole amount, not just the part above the line.
- Deposit by the 7th. Tax deducted in a month must reach the government by the 7th of the next month, through challan ITNS-281. March deductions get until 30 April.
- Report and certify. Non-salary deductions go into the quarterly Form 26Q return, and the payee gets a Form 16A certificate to match against their Form 26AS and AIS.
The section runs both ways. If you're the one being paid, this is why your money arrives 10% or 2% light. The deduction isn't extra tax, it's an advance against your final bill. Check your Form 26AS each quarter and claim the credit in your return; it's your money, already sitting with the government.
Where Section 194-I trips people up
- Individuals/HUF not under audit paying rent above ₹50,000/month deduct 2% under old Sec 194-IB instead (annual, in the last month).
- TDS applies on rent excluding GST when GST is separately shown.
Sources
- Finance Act, 2025†Official text (CBDT) · archived copy
- Finance Act, 2019†Official text (CBDT) · archived copy
† pending CA verification against the Finance Act 2025 text.
Section 194-I: questions people actually ask
What is the TDS rate on rent?
10% for land, building or furniture and 2% for plant & machinery, once rent crosses ₹50,000 a month. Salaried individuals paying personal house rent above ₹50,000/month deduct 2% once a year instead (old Sec 194-IB).