{"id":5517,"date":"2021-10-29T16:59:20","date_gmt":"2021-10-29T11:29:20","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=5517"},"modified":"2025-01-07T12:19:00","modified_gmt":"2025-01-07T06:49:00","slug":"194i-tds-on-rent-payments","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/","title":{"rendered":"Section 194I: A Complete TDS Guide on Rent Payments"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Section 194I is applicable on payments for assets on lease, sublease, tenancy, or agreement that small businesses and startups rent for their day-to-day operations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Read on to understand Section 194I in detail and its impact on your business.\u00a0<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e1890339da4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e1890339da4\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#What-is-Section-194I\" >What is Section 194I?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#What-is-the-TDS-rate-under-Section-194I\" >What is the TDS rate under Section 194I?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#When-is-TDS-deducted-for-rent-payments\" >When is TDS deducted for rent payments?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#Due-dates-for-depositing-TDS\" >Due dates for depositing TDS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#Interest-on-late-payment-or-non-payment-of-TDS\" >Interest on late payment or non-payment of TDS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#Exceptions-for-Section-194I\" >Exceptions for Section 194I<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#Cooling-charges-to-cold-storage-owners\" >Cooling charges to cold storage owners:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#GST-on-Rental-Income\" >GST on Rental Income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/194i-tds-on-rent-payments\/#Lump-Sum-premium\" >Lump-Sum premium:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-Section-194I\"><\/span>What is Section 194I?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Section 194I was introduced by the Indian government to withhold taxes on all rental income exceeding a certain amount. It demands businesses to deduct <a href=\"https:\/\/razorpay.com\/blog\/online-tds-payment-due-dates-penalties\/\" target=\"_blank\" rel=\"noopener\" data-schema-attribute=\"\">TDS<\/a> on rental payments above Rs 2,40,000 for plant and machinery, building, furniture, and fittings.<\/span><\/p>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/tax-payments\/?r=blog_cta_business_banking_section_194i&amp;utm_source=blog&amp;utm_medium=cta\">Pay TDS Now!<\/a><\/p>\n<p><span style=\"font-weight: 400;\"><em><strong>Note:<\/strong><\/em> With effect from 1st June 2017, a person who is Individual or HUF is also liable to deduct TDS if he pays rent in excess of Rs 50000\/- per month.<\/span><\/p>\n<p><b><i>Sec 194I\u00a0 is applicable on the following assets-<\/i><\/b><\/p>\n<p><span style=\"font-weight: 400;\">a) Land\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">b) Building (including factory building)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">c) Land appurtenant to a building (including factory building<\/span><\/p>\n<p><span style=\"font-weight: 400;\">d) Machinery<\/span><\/p>\n<p><span style=\"font-weight: 400;\">e) Plant<\/span><\/p>\n<p><span style=\"font-weight: 400;\">f) Equipment<\/span><\/p>\n<p><span style=\"font-weight: 400;\">g) Furniture<\/span><\/p>\n<p><span style=\"font-weight: 400;\">h) Fittings\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-is-the-TDS-rate-under-Section-194I\"><\/span>What is the TDS rate under Section 194I?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Machines, plants, or equipment are subject to a 2% tax. The use of any land or building (inclusive of factory buildings) or both and furniture or fittings is subject to a 10% charge.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"When-is-TDS-deducted-for-rent-payments\"><\/span>When is TDS deducted for rent payments?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The deductor needs to deduct TDS when:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the amount is credited to the deductee\u2019s account<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the payment is made to the deductee by cash, <a href=\"https:\/\/razorpay.com\/learn\/what-is-cheque\/\">cheque<\/a>, bank draft, or through any online mode of payment<br \/>\n<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Due-dates-for-depositing-TDS\"><\/span>Due dates for depositing TDS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>TDS under Section 194I should be collected and deposited to the government by 7th of the subsequent month. However, the tax deducted in March should be deposited by 30th April.<\/p>\n<p>The deductor can pay TDS by filling\u00a0<a href=\"https:\/\/razorpay.com\/blog\/online-tds-payment-due-dates-penalties\/\" target=\"_blank\" rel=\"follow noopener\" data-wpel-link=\"internal\">Challan No. ITNS 281<\/a> via<\/p>\n<ul>\n<li>Physically visiting an authorised bank branch<\/li>\n<li aria-level=\"1\">Logging on the NSDL website<\/li>\n<li aria-level=\"1\">Free TDS payment tool powered by RazorpayX<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/tax-payments\/?r=blog_cta_business_banking_section_194i&amp;utm_source=blog&amp;utm_medium=cta\">Pay TDS Now!<\/a><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Interest-on-late-payment-or-non-payment-of-TDS\"><\/span>Interest on late payment or non-payment of TDS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li>An interest of 1% per month is applicable if a deductor fails to deposit TDS. The interest will apply from the due date of deduction to the actual date of deduction<\/li>\n<li>Late payment of TDS attracts an interest of 1.5% per month from the actual date of deduction to the date of final payment<\/li>\n<li>Delay in filing the TDS return attracts a penalty of Rs. 200 per day<\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Exceptions-for-Section-194I\"><\/span>Exceptions for Section 194I<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Cooling-charges-to-cold-storage-owners\"><\/span>Cooling charges to cold storage owners:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">CBDT Circular No. 1\/2008 dated 10.01.2008 demands no TDS to be deducted on rent payments made to cold storage owners. It states that since the primary function of cold storage is to preserve perishable goods using a mechanical process, storage is just an incidental service and not applicable for Section 194I<\/span><b><i><\/i><\/b><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"GST-on-Rental-Income\"><\/span>GST on Rental Income<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">As GST charged by the landlord does not constitute rental income, it does not come under the ambit of Section 194I.<\/span><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Lump-Sum-premium\"><\/span>Lump-Sum premium:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">CBDT Circular no. 35\/2016 states that that lump-sum premium or one-time upfront lease charges paid for acquiring long-term lease rights, which are not adjustable against periodic rent paid\/payable, would not constitute rent within Sec 194I.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We hope this guide helped you understand TDS payments under Section 194I.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you struggle to manually calculate and pay monthly TDS for your business, click the link below to know how you can put an end to that struggle, today!<\/span><\/p>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/blog\/tds-payments-for-indian-businesses-automate-tax-payments\/\">Automate TDS payments for your Business<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 194I is applicable on rent payments for assets on lease, sublease, tenancy, or agreement that small businesses and startups rent for their day-to-day operations. Read on to understand Section 194I in detail and its impact on your business.\u00a0<\/p>\n","protected":false},"author":151156479,"featured_media":5518,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3437],"tags":[],"class_list":{"0":"post-5517","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/5517","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156479"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=5517"}],"version-history":[{"count":3,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/5517\/revisions"}],"predecessor-version":[{"id":15322,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/5517\/revisions\/15322"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/5518"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=5517"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=5517"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=5517"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}