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TDS on Rent – Sec 194I


The section of TDS 194-I deals with “TDS ON RENT”

What is “Rent” in terms of Section 194-I?

This section of TDS is applicable for who are having rental income from the following
Rent’ means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any:
1. land or
2. Building -includes factory building
3. Land appurtenant to a building –includes factory building
4. Machinery
5. Plant
6. Equipment
7. Furniture
8. Fittings

What is section 194I?

A person who is not being an individual or HUF paying rent to a resident person is liable to deduction TDS on Rent as per the provisions of section 194-I of the Income Tax Act, 1961.

What is the exemption limit for TDS on rent?

The TDS on Rent is not required to be deducted if the aggregate amount in the Financial Year doesn’t exceed INR 2, 40,000.

Cases Where TDS Is deducted under section 194I

Under the following Circumstances 194 I is applicable
• Tenant Paying the Rent
• When Tenant is payer or HUF and if his gross sales and gross or turnover crosses the limit specified for 44AB.
• When Rent is paid to a resident person

Rates of TDS

Rates of TDS Typically range from 2%-10%.In the case of machinery and plant equipment, it ranges as 2%, and TDS deduction calculates to 1.5%.In the case of Renting of land, building, land appurtenant, Furniture, and Fitting it ranges to 10% TDS deduction calculates to 7.5%. However, if PAN Is not furnished it ranges from 20%

When will be the TDS 194-I will be Exempted?

Section 194-I of the Income Tax Act, 1961 provides that TDS will not be deducted under the Following Circumstances:
• If the income credited/paid in the Financial Year does not exceed INR 2, 40,000.
• If the payer/tenant is an individual or HUF who is not liable to tax audit as per section 44 (AB) clause (a) or (b).
• If the Rent is paid / payable to a Government agency.
• If the Sharing of proceeds between a Film Distributor and Exhibitor owing the cinema theatre

Deadline to PAY TDS

• Government Organization- On the same day without using any challan form
• If the payment is made other than the Government- On or before 7 days from the end of the month in which
deduction is made, where tax is paid accompanied by an Income-tax Challan
• If the amount is credited or paid in the month of March- On or before April 30
• In any other case- On or before 7 days from the end of the month in which the deduction is made.

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