TDS on Rent Under Section 194-I: The New 50,000 a Month Rule

In short: From 1 April 2025, a business or other non individual tenant deducts TDS on rent under Section 194-I of the Income-tax Act, 1961 only when the rent it pays for a month, or part of a month, crosses ₹50,000. The old yearly limit of ₹2,40,000 is gone. The rate is 10% for land, building, furniture and fittings, and 2% for plant, machinery and equipment. The tenant needs a TAN and files Form 26Q. From 1 April 2026 the same rule continues under Section 393 of the Income-tax Act, 2025, so the numbers below still apply for FY 2026-27.

Section 194-I is the rule that makes companies, firms, government offices and other non individual tenants cut tax at source before paying rent to a landlord. The Finance Act 2025 changed the trigger. Earlier, you started deducting once a landlord's rent crossed ₹2,40,000 in the financial year. Now the test is monthly: deduct only if the rent for a month, or part of a month, is more than ₹50,000. This is a different rule from Section 194-IB, which is the one that applies to ordinary individual and HUF tenants.

Most rent confusion comes from mixing up these two sections. They look similar but apply to different tenants and use different forms.

For the tenant side of 194-IB, see TDS on rent under 194-IB.

1. You run a company, firm, LLP, trust, society or government office that pays office or shop rent. Section 194-I applies. You need a TAN.
2. You are an individual or HUF, and your business turnover crossed ₹1 crore, or your professional receipts crossed ₹50 lakh, in the previous year, so your accounts were audited under Section 44AB. Section 194-I applies to you too.
3. You are an ordinary salaried person or a small individual or HUF tenant not under audit. Section 194-I does not apply. You use Section 194-IB instead.

1. Get a TAN. Apply through the Income Tax Department's TDS facility if you do not already have one. A TAN is mandatory for filing Form 26Q.
2. Check the monthly rent. If rent for a month, or even part of a month, is more than ₹50,000, deduct TDS on the whole rent for that month, not just the part above ₹50,000.
3. Pick the correct rate. Use 10% for land, building, furniture and fittings. Use 2% for rent of plant, machinery or equipment. If the landlord has not given a PAN, deduct at 20% under Section 206AA.
4. Deduct at the time of credit or payment, whichever is earlier.
5. Deposit the TDS by the 7th of the next month. For rent paid in March, the deadline is 30 April.
6. File Form 26Q every quarter and issue Form 16A to the landlord so they can claim credit.

1. Treating ₹6 lakh a year as the rule. The legal test is ₹50,000 a month, not ₹6 lakh a year. A single month of ₹55,000 rent triggers TDS for that month even if the yearly total is small.
2. Deducting only on the amount above ₹50,000. Once the monthly rent crosses ₹50,000, TDS applies to the entire month's rent.
3. Using Form 26QC. That is the 194-IB form. A 194-I tenant uses Form 26Q.
4. Forgetting the TAN. Without a TAN you cannot file Form 26Q and you face penalties.
5. Mixing rates. Plant and machinery is 2%, everything else under 194-I is 10%. Do not apply one rate to both.

Dr. Shrawan Kumar Pathak runs a diagnostic clinic in Patna that was tax audited under Section 44AB last year because its receipts crossed ₹50 lakh. From April 2025 the clinic pays ₹70,000 a month as office rent to its landlord. Because the monthly rent is above ₹50,000 and the clinic is an audited entity, Section 194-I applies. Each month the clinic deducts 10% of ₹70,000, which is ₹7,000, pays the landlord ₹63,000, and deposits ₹7,000 with the government by the 7th of the next month. For the rent paid in March 2026, the clinic deposits the TDS by 30 April 2026. It files Form 26Q every quarter and gives the landlord Form 16A.

From 1 April 2025, TDS applies only when rent for a month, or part of a month, is more than ₹50,000. The old ₹2,40,000 yearly limit no longer applies.

₹6 lakh is just ₹50,000 multiplied by twelve months. The actual legal test is the monthly figure of ₹50,000, so even one month above that limit triggers TDS for that month.

Section 194-I is for businesses and audited individuals or HUF, needs a TAN, and uses Form 26Q at 10% or 2%. Section 194-IB is for ordinary individual or HUF tenants, needs no TAN, and uses Form 26QC at 2%.

Yes, an individual or HUF whose accounts were tax audited under Section 44AB in the previous year deducts under Section 194-I, not 194-IB.

Yes. From 1 April 2026 the same rent TDS rule sits in Section 393 of the Income-tax Act, 2025. The ₹50,000 monthly threshold, the 10% and 2% rates and Form 26Q all continue, so the figures here still apply for FY 2026-27.

A quarterly Form 26Q. The deductor must hold a TAN and issue Form 16A to the landlord.

1. TDS on rent under 194-IB
2. Form 26QB for property purchase
3. Which ITR form to file
4. AI RTI Drafter
5. The RTI Playbook

1. Income Tax Department, CBDT, Section 194-I and Section 393 portal: https://www.incometax.gov.in
2. Finance Act 2025 amendment to Section 194-I, threshold change to ₹50,000 per month effective 1 April 2025: https://taxguru.in/income-tax/budget-2025-threshold-tds-section-194-i-rent-increased.html
3. Section 194-I rates, TAN, Form 26Q and deposit timeline: https://cleartax.in/s/section-194i-tds-on-rent
4. Section 393 of the Income-tax Act, 2025 continuing the rent TDS rule from 1 April 2026: https://cleartax.in/s/section-393-of-income-tax-act