{"id":24749,"date":"2019-09-19T16:10:11","date_gmt":"2019-09-19T10:40:11","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=24749"},"modified":"2019-09-19T16:10:12","modified_gmt":"2019-09-19T10:40:12","slug":"tds-on-rental-income-section-194-i-of-the-income-tax-act-1961","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/tds-on-rental-income-section-194-i-of-the-income-tax-act-1961\/","title":{"rendered":"TDS on Rental Income: Section 194I of the Income Tax Act, 1961"},"content":{"rendered":"<p class=\"has-drop-cap\">Section 194-I of the Income Tax Act,\n1961 was inserted vide Finance Act, 1994 for the imposition of tax on rent paid\nor payable by an assessee. This section deals with &ldquo;TDS on Rent.&rdquo; The\ngovernment has introduced the provisions of this section in order to cover\nincome by way of rent, and the same has been included in the scope of Taxation.\nThis provision makes rental income taxable in India.<\/p>\n\n\n\n<p>In India, many individuals purchase <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>property<\/a> for the purpose of investment. Such property is purchased with the intention to sell in the future with appreciated value or offer for rental to earn additional income in the form of rent. It is, therefore, apparent that the rental income forms a major source of income in India. It is for this reason that the Finance Ministry felt the need for the introduction of <strong>Section 194I<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Income_tax_in_India\">[1]<\/a><\/sup> in order to include rental income in the scope of taxation.<\/p>\n\n\n\n<p>In the budget of 2019, the Finance\nMinister has introduced an <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Amendment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An &amp;quot;amendment&amp;quot; refers to the formal change or correction of a legal document, often involving additions, variations, or deletions to address irregularities or clarify points in an agreement.(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/amendment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>amendment<\/a> in the provisions of the applicability of\nTDS on Rental Income. Earlier, TDS on the rent was deducted by only\nprofessionals or business houses. However, with the new amendment, salaried\nemployees are also now required to deduct TDS on rental income. Section 194-I,\nalong with its amendments, is discussed comprehensively henceforth.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Section 194-I of the Income Tax Act, 1961<\/strong><\/h3>\n\n\n\n<p>Section\n194-I of the Income Tax Act, 1961 governs the provisions for deduction of TDS\non Rent paid. This section also defines the treatment of TDS on Rent. This\nsection applies to the taxpayers whose primary source of income is earned by\nway of renting or subletting their property. <\/p>\n\n\n\n<p>Income\nin the form of rent received from the property is treated as an additional\nincome in the hands of the salaried employee or businessmen and is subjected to\nTDS. Tax is deducted in the form of TDS from rental income in case the amount\npaid\/received in any financial year is <strong>INR\n180000 or more<\/strong>.<\/p>\n\n\n\n<div class=\"shadow1\"><strong> However,the threshold limit of rental income has been increased by Rupees Sixty thousand for the financial year 2019-20 from INR 180000 to INR 240000.<\/strong> <\/div><br>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Applicability of Section 194-I of TDS on\nRental Income<\/strong><\/h3>\n\n\n\n<p>Following payments are applicable\nfor the deduction of TDS on rental income:<\/p>\n\n\n\n<ul><li><strong>Income by way of letting the factory building: <\/strong>Income in the form of rent received by renting the factory building is said to be &ldquo;Business Income&rdquo; in the hands of lessor or owner of the building. <\/li><li><strong>Income in the form of Surcharge: <\/strong>Any service charge paid to the business is covered under the definition of rent &amp; therefore, it comes under the purview of this section.<\/li><li><strong>TDS in case of renting by separate persons: <\/strong>The person receiving the rent is subjected to deduct TDS under section 194-I in the case where the building is let out by one person &amp; its furniture and fixture are rented by some different person.<\/li><li><strong>TDS in case if rent is not paid monthly: <\/strong>Section 194-I does not mandate on a monthly deduction of TDS. In the case of quarterly payments, TDS can also be deducted every quarter. TDS is deducted once a year based on the actual payment received or credited in case the rent is paid yearly.<\/li><li><strong>Cold storage charges: <\/strong>Rent paid for the cold storage plants where milk, ice cream, and vegetables are stored, is covered under the purview of this section.<\/li><li><strong>Hall Rent Paid: <\/strong>Associations of persons are obliged to deduct TDS in case the rent paid for the use of hall exceeds INR 2,40,000<strong>. <\/strong><\/li><li><strong>Payments to hotels: <\/strong>Section 194-I does not apply in case of the hotel charges only for catering and not for the use of its premises. &nbsp;<\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Also Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/tds-exemption-certificate\/\" target=\"_blank\" rel=\"noopener noreferrer\">TDS Exemption Certificate<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Exception for applicability of section 194-I<\/strong><\/h2>\n\n\n\n<p><strong>Section 194-I does not apply to the following cases:<\/strong><\/p>\n\n\n\n<ul><li>No TDS is required to be\ndeducted in case the <strong><em>rent paid does not exceed INR 2,40,000<\/em><\/strong>\nduring the financial year under review.<\/li><li>No deduction of TDS is\nrequired in case <strong><em>the rent is paid by an Individual or HUF<\/em><\/strong> who is not carrying on\nany business that requires to be audited under the Income Tax Act. <\/li><li>Income received in the\nform of lease for subletting film theatre under the agreement between a film\ndistributor, and film exhibitor is not subjected to TDS as lease income is not\nconsidered as rented income.<\/li><li>The payment made to the\ngovernment, any statutory authority or any local authorities are exempted from\nthe purview of this section.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/enterslice.com\/income-tax-return-filing\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" loading=\"lazy\" width=\"730\" height=\"90\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/INCOME-TAX-ADVISORY.png\" alt=\"INCOME TAX ADVISORY\" class=\"wp-image-23055\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/INCOME-TAX-ADVISORY.png 730w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/INCOME-TAX-ADVISORY-300x37.png 300w\" sizes=\"(max-width: 730px) 100vw, 730px\"\/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Point of Deduction for TDS<\/strong><\/h2>\n\n\n\n<p><strong>The tax is deducted at source at the earliest of the following:<\/strong><\/p>\n\n\n\n<ol><li>The credit of income by\nway of rent&nbsp; in the account of the payee<\/li><\/ol>\n\n\n\n<p><strong>OR<\/strong><\/p>\n\n\n\n<ul><li>Payment by way of cash,\ncheque, draft, or any other mode.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Due Date for deposit of TDS<\/strong><\/h3>\n\n\n\n<p><strong>The due date for deposit of TDS varies depending upon the case to case:<\/strong><\/p>\n\n\n\n<ol><li><strong>When\nthe payment is made by or on behalf of the government:<\/strong><\/li><li>Without income tax\nchallan: <em>on the same day<\/em><em><\/em><\/li><li>With Income Tax challan:\n<em>within 7 days from the end of the month\nwhen the deduction is made.<\/em><em><\/em><\/li><\/ol>\n\n\n\n<ul><li><strong>When\nthe payment is made to anyone other than the government: <\/strong><\/li><li>In case the amount is\npaid in March: <em>on or before 30<sup>th<\/sup>\nApril<\/em><\/li><\/ul>\n\n\n\n<ul><li><strong>In any\nother case:<\/strong><\/li><li><em>Within 7 days from <\/em><em>the end of the month in which deduction is made. <\/em><em><\/em><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Rate of TDS <\/strong><\/h2>\n\n\n\n<p><strong>Following are the rates of deduction of tax at source:<\/strong><\/p>\n\n\n\n<ol><li>Rent paid on Plant,\nmachinery &amp; equipment: <strong>TDS @ 2%<\/strong><\/li><li>Rent paid on land &amp;\nbuilding: <strong>TDS @ 10%<\/strong><\/li><li>Rent paid on furniture\n&amp; fittings:<strong> TDS @10%<\/strong><\/li><\/ol>\n\n\n\n<p><strong><em>In case of joint\nownership of the property; TDS on rent is required to be paid by such owner\nwhose share exceeds INR 180000 in any Financial Year.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Issue of TDS certificate<\/strong><\/h2>\n\n\n\n<p>Following is the time limit for the\nissuance of TDS certificate in case of deduction of TDS on rent:<\/p>\n\n\n\n<p><strong><em>In the case of\nNon-Government Deductions:<\/em><\/strong><\/p>\n\n\n\n<ol><li>For the quarter of April\nto June: within 30<sup>th<\/sup> July<\/li><li>For the quarter of July\nto September: within 30<sup>th<\/sup> October<\/li><li>For the quarter of\nOctober to December: within 30<sup>th<\/sup> January<\/li><li>For the quarter January\nto March: within 30<sup>th<\/sup> May<\/li><\/ol>\n\n\n\n<p><strong><em>In the case of\nGovernment deductions:<\/em><\/strong><\/p>\n\n\n\n<ol><li>For the quarter of April\nto June: within 15<sup>th<\/sup> August<\/li><li>For the quarter of July\nto September: within 15<sup>th<\/sup> November<\/li><li>For the quarter of\nOctober to December: within 15<sup>th<\/sup> February<\/li><li>For the quarter January\nto March: within 30<sup>th<\/sup> May<\/li><\/ol>\n\n\n\n<p><strong><em>A TDS certificate\nis issued in Form 16A every quarter as per Income Tax Act.<\/em><\/strong><\/p>\n\n\n\n<p><strong>Key points for understanding Section 194-I<\/strong><\/p>\n\n\n\n<p>Following are the key points for\nbetter understanding about section 194-I<\/p>\n\n\n\n<ul><li>Any person other than an\nindividual or HUF who makes the payment of rent to any resident is liable to\ndeduct tax at source under this section.<\/li><li>With the introduction of the budget in\n2017 effective from 1<sup>st<\/sup> June 2017, all the individual or HUF who\nmake the payment of rent to a resident of more than INR 50,000 per month is\nsubjected to deduct TDS at the rate of 5%.<\/li><li>With effect from\nFinancial Year 2019-20, an aggregate amount of the payment made or credited to\nany resident exceeds INR 2,40,000 is covered under the provisions of this\nsection.<\/li><li>No TDS is deducted on\nany security payment or advance payment made by the tenant <strong><em>with a condition to return such a\nsecurity deposit<\/em><\/strong> at the time of vacating the premises.<\/li><li>In case the advance is\nreceived without any condition of returning or refunding the same, then such\npayment is subjected to TDS.<\/li><li><strong><em>The\nsurcharge<\/em><\/strong> is involved in case of <strong><em>rent\npaid to exceed INR 1 Crore<\/em><\/strong>, and it involves any foreign company.<\/li><li>No TDS is charged in\ncase the tenant pays municipal taxes.<\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Recommended Article:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/section-201-of-the-income-tax-act1961\/\" target=\"_blank\" rel=\"noopener noreferrer\">Section 201 of the Income Tax Act,1961 &ndash; Interest on Late Payment of TDS&#65279;<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Section 194-I of the Income Tax Act, 1961 was inserted vide Finance Act, 1994 for the imposition of tax on rent paid or payable by an assessee. This section deals with &ldquo;TDS on Rent.&rdquo; The government has introduced the provisions of this section in order to cover income by way of rent, and the same [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":24759,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1473,2435],"tags":[2752,2753,2754],"acf":{"service_id":"0"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>TDS on Rental Income: Section 194-I of the Income Tax Act - Enterslice<\/title>\n<meta name=\"description\" content=\"Section 194-I of the Income Tax Act, Deals with TDS on Rental Income. Also Read about Exception for applicability of section 194-I.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/tds-on-rental-income-section-194-i-of-the-income-tax-act-1961\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"TDS on Rental Income: Section 194-I of the Income Tax Act - Enterslice\" \/>\n<meta property=\"og:description\" content=\"Section 194-I of the Income Tax Act, Deals with TDS on Rental Income. Also Read about Exception for applicability of section 194-I.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/tds-on-rental-income-section-194-i-of-the-income-tax-act-1961\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-19T10:40:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-19T10:40:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/Section-194I-on-rent.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Savvy Midha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/10\/Savvy-Midha.jpg","authorDescription":"\"Savvy Midha holds the degrees of Bachelor of Commerce(honors), LL.B and Company Secretary. She is an experienced Legal and Financial writer with expertise in research, drafting, and copy-writing.\"","postViews":557,"readingTime":5,"nextPost":{"id":24753,"slug":"tds-on-non-resident-indians-section195-income-tax-act"},"prevPost":{"id":24713,"slug":"know-about-the-appointment-of-independent-director"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/Section-194I-on-rent.jpg","postTerms":"Income Tax","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/24749"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=24749"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/24749\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/24759"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=24749"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=24749"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=24749"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}