Two provisions cover rent, and they do not overlap. Section 194I is the business rule. Section 194IB exists so that an individual paying a large personal rent is not forced into the TAN and quarterly-return machinery. Getting the wrong one is not a small error: the payer, not the landlord, answers for a shortfall.
Which section applies
| 194I | 194IB | |
|---|---|---|
| Who deducts | Business or professional liable to audit | Individual or HUF not liable to audit |
| Threshold | Rent above ₹2,40,000 in the year | Rent above ₹50,000 per month |
| Rate | 10% land/building/furniture, 2% plant and machinery | A single prescribed rate on the annual rent |
| When | At credit or payment, monthly | Once a year, or when the tenancy ends |
| TAN needed | Yes | No — deposited on the PAN via a challan-cum-statement |
That TAN row is the design intent. 194IB deliberately spares an individual tenant the apparatus of a deductor, at the cost of a once-a-year lump deduction.
The parts people get wrong
- Rent is not only for premises. Machinery, plant and equipment hire is rent for 194I, at the lower 2% rate. Businesses hiring generators, cranes or vehicles routinely miss this.
- GST is excluded from the base. Deduct on the rent, not on the GST charged on it — assuming the tax is shown separately on the invoice.
- Joint owners are tested separately. The ₹2.4 lakh limit applies per payee, so rent split between two co-owners may fall below the line for each.
- Municipal taxes borne by the tenant can form part of rent depending on what the agreement says the tenant is paying for.
If your landlord is not GST-registered and the premises are commercial, you also have a reverse-charge liability on the same rent — a separate obligation covered in GST on commercial rent. Rent triggers two different taxes in two different regimes.
What a shortfall costs
Interest runs at a monthly rate from the date deduction was due, and a late return carries its own daily fee. The larger risk is the disallowance: a payment on which tax should have been deducted and was not can lose part of its deduction, so you pay tax on rent you actually paid out.
The deductee side matters too — your landlord looks for the credit in their statement. Our note on 26AS, AIS and TIS covers how that reconciliation works from the other side.
Where we come in
We map every payment head that carries a withholding duty when we take on a client — rent, contractor, professional fees, commission — and run the quarterly returns. See TDS return filing.
This article is general information, not professional advice. Limits, rates and dates change by notification — confirm the position for your own year before acting on it.