Section 194-I.
TDS on rent (land, building, plant & machinery).
Rent paid for land, building, furniture, plant or machinery
When it applies
Section 194-I applies on rent paid for tangible assets — land, building (including factory and warehouse), furniture, plant, machinery, and equipment. It does not apply on rent paid for intangible assets, and it does not apply where the payer is an individual or HUF not subject to tax audit (Section 194-IB covers that case).
Who must deduct
Any person other than an individual/HUF not subject to tax audit. Companies, firms, LLPs, trusts, and audited individuals all deduct under 194-I. Government and local authorities also deduct.
Common mistakes
- Aggregating rent paid for the building and the equipment under one rate — they get different rates (10% vs 2%).
- Missing the threshold reset annually — TDS triggers when annual rent crosses ₹2,40,000.
- Not deducting on rent paid in advance — TDS applies at time of payment, not accrual.
- Failing to deduct on rent paid to non-residents — Section 195 applies, not 194-I, with its own DTAA analysis.
Frequently asked
What if I'm an individual paying rent above ₹50,000/month?
Section 194-IB applies (not 194-I). Deduct 2% TDS on the total rent paid in the last month of the FY or on vacating the property, whichever earlier. No TAN needed; payment via Form 26QC. This is the salaried-person rent-TDS rule.
Is GST on rent included in the TDS base?
No — TDS is on the rent component excluding GST. If your invoice is ₹1,00,000 rent + ₹18,000 GST, deduct TDS only on ₹1,00,000.
Does TDS apply on hotel room hire?
Yes, if it constitutes 'rent' — typically when a room is booked for a continuous long period and used as a quasi-leased space. Casual hotel stays for short business trips are not rent for 194-I purposes.