by Shaini Theenseen
Rent constitutes payments made for a lease, tenancy, sub-lease or other arrangements for properties like land, building, plant, machinery, land with factory, building with factory, furniture or fittings etc.
The Government has taken income from Rent under the umbrella of TDS provisions through Sections 194I and 194IB, where
- 194I relates to TDS on rent
- 194IB relates to TDS on payment of rent by certain individuals or HUF
Section 194I
- The person (Except Individuals or HUFs not subject to tax audit under Section 44AB do not need to deduct TDS) who is responsible to pay rent to a resident person is liable to deduct tax at source i.e.it makes the payer liable to deduct tax due before paying the remaining amount to the payee.
- TDS threshold for deduction of tax on rent is Rs. 2,40,000 for FY 2024-25
- Rates of TDS
| Nature of Payment | Rates |
| Rent on Plant, Machinery, equipment | 2% |
| Rent on land, Building, furniture, Fittings | 10% |
Section 194IB
- It is mandatory for any person i.e Individual and HUF who is not liable to audit U/S 44AB, to deduct TDS for rent exceeding Rs. 50,000 per month
- In such case, the rate of tax deduction is 5%
- However, the Union Budget has amended section 194-IB and reduced the rate of TDS to 2% from 5%
When shall TDS be deducted
TDS has to be deducted at the time of payment or credit of Rent to the Owner or Landlord.
NOTE
- If Pan of the Recipient is not available or is inoperative, than the rate of TDS in all the above cases shall be 20% as per Section 206AA
- Rent paid to Government Bodies or Agencies is exempted from TDS
- TDS on Rent does not charge any Education cess or Higher And Secondary cess.
