I pay rent for a warehouse and I also hire a generator on a monthly charge. Do I deduct under section 194-I, at what rate on each, and from what figure does the obligation start — is it an annual total or a monthly one?
Section 194-I sets two rates on one kind of payment: two per cent where the rent is for the use of any machinery or plant or equipment, ten per cent where it is for the use of any land or building (including a factory building), land appurtenant to a building, furniture or fittings, and both have stood since 1 October 2009. The threshold is the part that moved — until 31 March 2025 it was an annual aggregate of two hundred and forty thousand rupees paid to a payee, and from 1 April 2025 the first proviso was substituted so that the test is now whether the rent credited or paid "for a month or part of a month" to that payee exceeds fifty thousand rupees, so a payer who is still adding up the year has the wrong test. The section does not reach an individual or a Hindu undivided family unless the second proviso brings them in on turnover, and the only exclusion written into the section itself is for rent paid to a real estate investment trust on a real estate asset referred to in clause (23FCA) of section 10. All of this is the Income-tax Act, 1961, which the CBDT's own transition FAQ says stands repealed on 1 April 2026. For a credit or payment on or after that date the corresponding provision is serial number 2(ii) of the Table to section 393(1) of the Income-tax Act, 2025, which carries the same two rates and the same fifty-thousand-a-month threshold.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Section 194-I of the Income-tax Act, 1961, as amended up to 2026. It bears on section 194-I, section 194-IB, section 194C, section 44AB, section 10(23FCA), section 194M, section 196, section 393 (Act of 2025) of the Income Tax Act 1961, in TDS Defaults, House Property and How Tax Law Is Read matters.
The threshold is where this section goes wrong in practice, and it goes wrong in both directions. A payer who kept the old habit of watching for two hundred and forty thousand rupees in the year will miss a deduction on a single month's rent of sixty thousand rupees paid in April, because the monthly test is satisfied at once and there is nothing to wait for. Going the other way, a payer of forty thousand rupees a month now has no obligation at all even though the year's rent is four hundred and eighty thousand rupees, where under the pre-April-2025 text the same payments were caught the moment the running total passed two hundred and forty thousand. Two identical rent rolls can therefore produce opposite answers depending only on which side of 1 April 2025 the credit falls, and an officer working a period that straddles the date has to apply two different tests to the same tenancy. The second place it goes wrong is the word “rent” itself. The Explanation does not define rent by reference to a lease: it reaches any payment under “any lease, sub-lease, tenancy or any other agreement or arrangement” for the use of the listed things, and it closes with “whether or not any or all of the above are owned by the payee”. That last clause is what catches a sub-lessee who charges on premises he does not own, and it means a payment can be rent for this section even though the payee could not have granted a lease. It is also why the fight in this area is almost never about ownership and almost always about whether the payment is for the use of the thing at all, or for a service performed using it — the question on which the library already holds Japan Airlines in the Supreme Court on landing, take-off and parking charges, the Bombay High Court in MSEDCL on transmission and wheeling charges, and the Board's own Circular 1/2008 on cold storage cooling charges and Circular 5/2002 on hotel accommodation.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The Year 2026 and Year 2025 departmental pages print the same operative words, but not the same sub-clause letters in the Explanation: the transcription below follows the Year 2025 page, because the Year 2026 print carries a lettering slip that the editor's note sets out. Section 194-I reads: "Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of— (a) two per cent for the use of any machinery or plant or equipment; and (b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings: Provided that no deduction shall be made under this section, where the income by way of rent credited or paid for a month or part of a month by such person to the account of, or to, the payee, does not exceed fifty thousand rupees: Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section: Provided also that no deduction shall be made under this section where the income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in clause (23FCA) of section 10, owned directly by such business trust. Explanation.—For the purposes of this section,— (i) "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,— (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; (ii) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly." The Year 2026 page prints the sub-clauses of Explanation clause (i) as (a), (b), (c), (c), (d), (f), (g), (h) — the letter (c) twice and no (e) at all. The clean sequence above is the Year 2025 print. The Year 2016 departmental page carries a general footnote against the section: "See rules 28, 28AA, 28AB, 30, 31, 31A, 31AB and 37BA and Form Nos. 13, 16A, 24G, 26AS, 26B, 26Q and 27A."
As the law stands on 23 September 2026 for any credit or payment made up to 31 March 2026, section 194-I obliges a payer who is not an individual or a Hindu undivided family, and an individual or Hindu undivided family who is caught by the second proviso, to deduct tax on rent paid to a resident: two per cent where the rent is for the use of machinery, plant or equipment, ten per cent where it is for the use of land, a building including a factory building, land appurtenant to a building, furniture or fittings. Deduction is at credit or payment, whichever is earlier, and a credit to a suspense account counts. What changed, and when. The two rates were substituted by the Finance (No. 2) Act, 2009 with effect from 1 October 2009, replacing a three-clause structure inserted by the Finance Act, 2007 with effect from 1 June 2007 which had charged ten per cent on machinery, plant or equipment, fifteen per cent on land or building where the payee was an individual or a Hindu undivided family and twenty per cent where the payee was anyone else. They have not moved since. The threshold moved three times: to one hundred and eighty thousand rupees a year by Act No. 14 of 2010 with effect from 1 July 2010; to two hundred and forty thousand rupees a year by Act No. 7 of 2019, which the departmental footnote also names as the Finance Act, 2019, with effect from 1 April 2019; and then, by Act No. 7 of 2025 with effect from 1 April 2025, the whole first proviso was substituted and the annual aggregate was replaced by a monthly test of fifty thousand rupees for a month or part of a month. The turnover test in the second proviso was substituted for the old cross-reference to "the monetary limits specified under clause (a) or clause (b) of section 44AB" by Act No. 12 of 2020 with effect from 1 April 2020. The third proviso, which takes rent paid to a real estate investment trust on a clause (23FCA) real estate asset out of the section, was inserted by Act No. 20 of 2015 with effect from 1 June 2015. One date sits outside the section. The CBDT's transition FAQ records that the Income-tax Act, 1961 stands repealed on 1 April 2026, and that any sum paid or credited on or after that date is governed by the corresponding withholding provision of the Income-tax Act, 2025 — section 393. Serial number 2(ii) of the Table to section 393(1) carries the same two rates and the same fifty-thousand-a-month threshold, so the substance is unchanged, but the section number you cite in a reply for a 2026-27 period is not 194-I.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on those pages. No judicial reasoning is involved.
"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,— (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee
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Handle my notice → Ask a CA on WhatsAppSection 194-I sets two rates on one kind of payment: two per cent where the rent is for the use of any machinery or plant or equipment, ten per cent where it is for the use of any land or building (including a factory building), land appurtenant to a building, furniture or fittings, and both have stood since 1 October 2009. The threshold is the part that moved — until 31 March 2025 it was an annual aggregate of two hundred and forty thousand rupees paid to a payee, and from 1 April 2025 the first proviso was substituted so that the test is now whether the rent credited or paid "for a month or part of a month" to that payee exceeds fifty thousand rupees, so a payer who is still adding up the year has the wrong test. The section does not reach an individual or a Hindu undivided family unless the second proviso brings them in on turnover, and the only exclusion written into the section itself is for rent paid to a real estate investment trust on a real estate asset referred to in clause (23FCA) of section 10. All of this is the Income-tax Act, 1961, which the CBDT's own transition FAQ says stands repealed on 1 April 2026. For a credit or payment on or after that date the corresponding provision is serial number 2(ii) of the Table to section 393(1) of the Income-tax Act, 2025, which carries the same two rates and the same fifty-thousand-a-month threshold. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 194-I, section 194-IB, section 194C, section 44AB, section 10(23FCA), section 194M, section 196, section 393 (Act of 2025) of the Income Tax Act 1961. It is reported as Section 194-I of the Income-tax Act, 1961, as amended up to 2026. The threshold is where this section goes wrong in practice, and it goes wrong in both directions. A payer who kept the old habit of watching for two hundred and forty thousand rupees in the year will miss a deduction on a single month's rent of sixty thousand rupees paid in April, because the monthly test is satisfied at once and there is nothing to wait for. Going the other way, a payer of forty thousand rupees a month now has no obligation at all even though the year's rent is four hundred and eighty thousand rupees, where under the pre-April-2025 text the same payments were caught the moment the running total passed two hundred and forty thousand. Two identical rent rolls can therefore produce opposite answers depending only on which side of 1 April 2025 the credit falls, and an officer working a period that straddles the date has to apply two different tests to the same tenancy. The second place it goes wrong is the word “rent” itself. The Explanation does not define rent by reference to a lease: it reaches any payment under “any lease, sub-lease, tenancy or any other agreement or arrangement” for the use of the listed things, and it closes with “whether or not any or all of the above are owned by the payee”. That last clause is what catches a sub-lessee who charges on premises he does not own, and it means a payment can be rent for this section even though the payee could not have granted a lease. It is also why the fight in this area is almost never about ownership and almost always about whether the payment is for the use of the thing at all, or for a service performed using it — the question on which the library already holds Japan Airlines in the Supreme Court on landing, take-off and parking charges, the Bombay High Court in MSEDCL on transmission and wheeling charges, and the Board's own Circular 1/2008 on cold storage cooling charges and Circular 5/2002 on hotel accommodation. If it applies to you, the first step is this: Test the threshold month by month, not year by year, for any rent credited or paid on or after 1 April 2025: ask whether the rent for that month or part of a month to that payee exceeds fifty thousand rupees.
The Year 2026 and Year 2025 departmental pages print the same operative words, but not the same sub-clause letters in the Explanation: the transcription below follows the Year 2025 page, because the Year 2026 print carries a lettering slip that the editor's note sets out. Section 194-I reads: "Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of— (a) two per cent for the use of any machinery or plant or equipment; and (b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings: Provided that no deduction shall be made under this section, where the income by way of rent credited or paid for a month or part of a month by such person to the account of, or to, the payee, does not exceed fifty thousand rupees: Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section: Provided also that no deduction shall be made under this section where the income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in clause (23FCA) of section 10, owned directly by such business trust. Explanation.—For the purposes of this section,— (i) "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,— (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; (ii) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly." The Year 2026 page prints the sub-clauses of Explanation clause (i) as (a), (b), (c), (c), (d), (f), (g), (h) — the letter (c) twice and no (e) at all. The clean sequence above is the Year 2025 print. The Year 2016 departmental page carries a general footnote against the section: "See rules 28, 28AA, 28AB, 30, 31, 31A, 31AB and 37BA and Form Nos. 13, 16A, 24G, 26AS, 26B, 26Q and 27A." The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. As the law stands on 23 September 2026 for any credit or payment made up to 31 March 2026, section 194-I obliges a payer who is not an individual or a Hindu undivided family, and an individual or Hindu undivided family who is caught by the second proviso, to deduct tax on rent paid to a resident: two per cent where the rent is for the use of machinery, plant or equipment, ten per cent where it is for the use of land, a building including a factory building, land appurtenant to a building, furniture or fittings. Deduction is at credit or payment, whichever is earlier, and a credit to a suspense account counts. What changed, and when. The two rates were substituted by the Finance (No. 2) Act, 2009 with effect from 1 October 2009, replacing a three-clause structure inserted by the Finance Act, 2007 with effect from 1 June 2007 which had charged ten per cent on machinery, plant or equipment, fifteen per cent on land or building where the payee was an individual or a Hindu undivided family and twenty per cent where the payee was anyone else. They have not moved since. The threshold moved three times: to one hundred and eighty thousand rupees a year by Act No. 14 of 2010 with effect from 1 July 2010; to two hundred and forty thousand rupees a year by Act No. 7 of 2019, which the departmental footnote also names as the Finance Act, 2019, with effect from 1 April 2019; and then, by Act No. 7 of 2025 with effect from 1 April 2025, the whole first proviso was substituted and the annual aggregate was replaced by a monthly test of fifty thousand rupees for a month or part of a month. The turnover test in the second proviso was substituted for the old cross-reference to "the monetary limits specified under clause (a) or clause (b) of section 44AB" by Act No. 12 of 2020 with effect from 1 April 2020. The third proviso, which takes rent paid to a real estate investment trust on a clause (23FCA) real estate asset out of the section, was inserted by Act No. 20 of 2015 with effect from 1 June 2015. One date sits outside the section. The CBDT's transition FAQ records that the Income-tax Act, 1961 stands repealed on 1 April 2026, and that any sum paid or credited on or after that date is governed by the corresponding withholding provision of the Income-tax Act, 2025 — section 393. Serial number 2(ii) of the Table to section 393(1) carries the same two rates and the same fifty-thousand-a-month threshold, so the substance is unchanged, but the section number you cite in a reply for a 2026-27 period is not 194-I.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on those pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: ""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,— (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Section 194-I of the Income-tax Act, 1961, as amended up to 2026. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 194-I, section 194-IB, section 194C, section 44AB, section 10(23FCA), section 194M, section 196, section 393 (Act of 2025), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. As the law stands on 23 September 2026 for any credit or payment made up to 31 March 2026, section 194-I obliges a payer who is not an individual or a Hindu undivided family, and an individual or Hindu undivided family who is caught by the second proviso, to deduct tax on rent paid to a resident: two per cent where the rent is for the use of machinery, plant or equipment, ten per cent where it is for the use of land, a building including a factory building, land appurtenant to a building, furniture or fittings. Deduction is at credit or payment, whichever is earlier, and a credit to a suspense account counts. What changed, and when. The two rates were substituted by the Finance (No. 2) Act, 2009 with effect from 1 October 2009, replacing a three-clause structure inserted by the Finance Act, 2007 with effect from 1 June 2007 which had charged ten per cent on machinery, plant or equipment, fifteen per cent on land or building where the payee was an individual or a Hindu undivided family and twenty per cent where the payee was anyone else. They have not moved since. The threshold moved three times: to one hundred and eighty thousand rupees a year by Act No. 14 of 2010 with effect from 1 July 2010; to two hundred and forty thousand rupees a year by Act No. 7 of 2019, which the departmental footnote also names as the Finance Act, 2019, with effect from 1 April 2019; and then, by Act No. 7 of 2025 with effect from 1 April 2025, the whole first proviso was substituted and the annual aggregate was replaced by a monthly test of fifty thousand rupees for a month or part of a month. The turnover test in the second proviso was substituted for the old cross-reference to "the monetary limits specified under clause (a) or clause (b) of section 44AB" by Act No. 12 of 2020 with effect from 1 April 2020. The third proviso, which takes rent paid to a real estate investment trust on a clause (23FCA) real estate asset out of the section, was inserted by Act No. 20 of 2015 with effect from 1 June 2015. One date sits outside the section. The CBDT's transition FAQ records that the Income-tax Act, 1961 stands repealed on 1 April 2026, and that any sum paid or credited on or after that date is governed by the corresponding withholding provision of the Income-tax Act, 2025 — section 393. Serial number 2(ii) of the Table to section 393(1) carries the same two rates and the same fifty-thousand-a-month threshold, so the substance is unchanged, but the section number you cite in a reply for a 2026-27 period is not 194-I. It arises in TDS Defaults, House Property and How Tax Law Is Read matters, on section 194-I, section 194-IB, section 194C, section 44AB, section 10(23FCA), section 194M, section 196, section 393 (Act of 2025) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For any credit or payment up to 31 March 2025, apply the old test instead — an annual aggregate of two hundred and forty thousand rupees to that payee — and say in your reply which test you applied and why. Split a composite invoice before you pick a rate. Two per cent attaches only to machinery, plant or equipment; ten per cent attaches to land, building, land appurtenant to a building, furniture and fittings. A single monthly charge for a furnished, air-conditioned office covers both limbs. If you are an individual or a Hindu undivided family, check the second proviso first: you are in this section only if your total sales, gross receipts or turnover from business exceeded one crore rupees, or from profession exceeded fifty lakh rupees, in the immediately preceding financial year. If you are not, look at section 194-IB instead — it is addressed to exactly the individuals and HUFs the second proviso leaves out, and the library's record on section 194-IB and section 194M sets out its rate, its once-a-year timing and why it needs no TAN. Check whether your landlord is a real estate investment trust holding the asset directly. If it is, the third proviso takes the payment out of the section altogether; nothing else in the section carries an exclusion. If your landlord is the Government or the Reserve Bank of India, do not deduct at all. Section 194-I carries no carve-out of its own, but section 196 opens “Notwithstanding anything contained in the foregoing provisions of this Chapter” and bars any deduction from sums payable to the Government, the Reserve Bank of India, a corporation established by or under a Central Act which is exempt from income-tax on its income, or a Mutual Fund specified under clause (23D) of section 10, where the sum is payable by way of interest or dividend on securities or shares “or any other income accruing or arising to it”. Rent is other income accruing to it, so this is a flat bar across the whole of Chapter XVII-B, not a relief you apply for. Do not extend that to a local-authority landlord. A municipality is not “the Government” and is not a corporation established by or under a Central Act, so section 196 does not reach it. Deduct under section 194-I unless the landlord produces a certificate under section 197. Before characterising a payment as rent, ask whether you are paying for the use of the thing or for a service performed with it. If it is a service, the section to look at is 194C, not 194-I. For any sum where the earlier of credit or payment falls on or after 1 April 2026, cite serial number 2(ii) of the Table to section 393(1) of the Income-tax Act, 2025, not section 194-I. A rent credited on 20 March 2026 and paid on 10 April 2026 stays under the 1961 Act, because the earlier event is the credit.
Still good law. Fifteen vintages of the section, from 2000 to 2026, have been compared. Every one of them outside the two relied on is an older vintage and none of them prints the monthly test. The record is built on the two newest, of 2026 and 2025 vintage, which print the same operative words. What corroborates what. The monthly fifty-thousand threshold is printed in both of those, and the 2025 text's footnote both attributes the substitution to Act No. 7 of 2025 with effect from 1 April 2025 and reproduces the superseded annual proviso - which matches, word for word, what the 2019 vintage prints as its operative first proviso. The CBDT's frequently-asked questions on deduction from rent corroborate the monthly figure independently under the 2025 Act. The two rates are printed identically in every vintage from 2014 onward and are corroborated by the departmental rate table for assessment year 2026-27; their last change is closed by the 2014 vintage's footnote, which also reproduces the 2007 three-clause structure it replaced. The turnover test is closed by footnotes in two different vintages and the business trust proviso by a third. Section 196 has been read. What is not closed. No text read names Act No. 7 of 2025 or Act No. 14 of 2010 by a popular title, so both are given by number. No Finance Act text has been read, and the Finance Act, 2026 has not been read against this section, although the 2026 vintage carries no footnote later than Act No. 7 of 2025. No citator check has been run. 'Good law' here means good law for a sum where the earlier of the event of credit or payment falls on or before 31 March 2026. The Board's transition guidance says the Income-tax Act, 1961 stands repealed on 1 April 2026; for anything later the operative provision is section 393(1) of the Income-tax Act, 2025, Table serial number 2(ii). No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
ON THE TEXT AND ITS CORROBORATION. The section is taken from the two newest consolidations for the Income-tax Act, 1961, of 2026 and 2025 vintage, which print the same operative words, with the amendment history taken from the footnote apparatus in those and in the 2021, 2020, 2016 and 2014 vintages. A vintage-by-vintage log with every footnote reproduced verbatim is held in this record's working notes and not on this page. A SETTLED DEFECT IN THE OFFICIAL TEXT. The 2026 vintage prints the sub-clauses of Explanation clause (i) as (a), (b), (c), (c), (d), (f), (g), (h) - the letter (c) against both 'land appurtenant to a building' and 'machinery', and no (e) anywhere. That was read three times across two distinct texts, each of which confirmed that (e) does not appear and that (c) appears twice. The 2025 vintage prints the clean sequence (a) to (h). It is a lettering slip in the 2026 print and not an artefact of any copy. This record prints the clean sequence from the 2025 text. If you quote the Explanation from a text carrying the slip, quote the letters as the statute runs - (d) machinery, (e) plant, (f) equipment - and do not cite a sub-clause (c) for machinery. WHAT THIS PAGE DOES NOT SETTLE. Two amending Acts are named here only by number, Act No. 7 of 2025 and Act No. 14 of 2010, because no text read gives either a popular title and the enacted words of neither have been read; the Finance Act, 2026 has likewise not been read against this section, so if you are relying on the threshold for a period after March 2026, check the Act itself. ON THE TRANSITION, which decides whether this page applies at all. The threshold and the rates stated here govern a sum where the earlier of the event of credit or payment falls on or before 31 March 2026. For anything later the operative provision is section 393(1) of the Income-tax Act, 2025, Table serial number 2(ii), and the figures must be taken from there. TWO BOUNDARIES DELIBERATELY LEFT OUT. The line between this section and section 194C - between paying for the use of a thing and paying for a service performed with it - is stated here in two sentences and is not worked out; the authorities on it, Japan Airlines, MSEDCL, Circular 1/2008 and Circular 5/2002, are in this library and should be read before that line is argued. And the individual and Hindu-undivided-family route out of this section runs through section 194-IB; this page points at it rather than restating its rate and timing. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
As the law stands on 23 September 2026 for any credit or payment made up to 31 March 2026, section 194-I obliges a payer who is not an individual or a Hindu undivided family, and an individual or Hindu undivided family who is caught by the second proviso, to deduct tax on rent paid to a resident: two per cent where the rent is for the use of machinery, plant or equipment, ten per cent where it is for the use of land, a building including a factory building, land appurtenant to a building, furniture or fittings. Deduction is at credit or payment, whichever is earlier, and a credit to a suspense account counts. What changed, and when. The two rates were substituted by the Finance (No. 2) Act, 2009 with effect from 1 October 2009, replacing a three-clause structure inserted by the Finance Act, 2007 with effect from 1 June 2007 which had charged ten per cent on machinery, plant or equipment, fifteen per cent on land or building where the payee was an individual or a Hindu undivided family and twenty per cent where the payee was anyone else. They have not moved since. The threshold moved three times: to one hundred and eighty thousand rupees a year by Act No. 14 of 2010 with effect from 1 July 2010; to two hundred and forty thousand rupees a year by Act No. 7 of 2019, which the departmental footnote also names as the Finance Act, 2019, with effect from 1 April 2019; and then, by Act No. 7 of 2025 with effect from 1 April 2025, the whole first proviso was substituted and the annual aggregate was replaced by a monthly test of fifty thousand rupees for a month or part of a month. The turnover test in the second proviso was substituted for the old cross-reference to "the monetary limits specified under clause (a) or clause (b) of section 44AB" by Act No. 12 of 2020 with effect from 1 April 2020. The third proviso, which takes rent paid to a real estate investment trust on a clause (23FCA) real estate asset out of the section, was inserted by Act No. 20 of 2015 with effect from 1 June 2015. One date sits outside the section. The CBDT's transition FAQ records that the Income-tax Act, 1961 stands repealed on 1 April 2026, and that any sum paid or credited on or after that date is governed by the corresponding withholding provision of the Income-tax Act, 2025 — section 393. Serial number 2(ii) of the Table to section 393(1) carries the same two rates and the same fifty-thousand-a-month threshold, so the substance is unchanged, but the section number you cite in a reply for a 2026-27 period is not 194-I.
TaxSphere, “Statutory position — s.194-I: two per cent on plant, machinery or equipment and ten per cent on land, building, furniture or fittings, on a threshold that became fifty thousand rupees a month on 1 April 2025”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-194-i-fifty-thousand-a-month-and-the-two-rates/ (validity last checked 2026-09-23)
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I am an individual paying Rs 70,000 a month rent, and separately I have paid an interior contractor Rs 62 lakh for my own house. When exactly do I deduct, how much, and do I need a TAN?
My client is an individual paying a contractor and also paying rent. He has no TAN. What does he deduct, and at what rate?
I paid External Development Charges to HUDA/HSVP because the Town and Country Planning Department told me to. I have no contract with HUDA. Does s.194C still oblige me to deduct tax at source?
I pay a consultant, I pay an engineering firm for technical work, and I pay my company's non-executive director a sitting fee. Do I deduct two per cent or ten per cent on each, and does the fifty thousand rupee limit apply to all three?
