TDS on rent

TDS is deducted at 10% on rent for land, buildings, furniture or fittings and at 2% on rent for plant, machinery or equipment. From 1-Apr-2025 no TDS is needed unless the rent paid or credited to a payee for a month or part of a month exceeds ₹50,000. For FY 2024-25 and earlier the limit was ₹2,40,000 of rent to a payee in the financial year.

Key points

• The deductor is any person other than an individual or HUF;
• an individual or HUF deducts under this section only if its business or professional receipts crossed the §44AB tax-audit limit in the preceding FY.
• The rate is 10% for land, building (including factory building), land appurtenant to a building, furniture and fittings, and 2% for plant, machinery and equipment, with the no-PAN rate stepping up to 20%.
• The threshold is rent of more than ₹50,000 for a month or part of a month to the payee — section 64 of the Finance Act 2025 substituted this for the earlier ₹2,40,000-a-year limit with effect from 1-Apr-2025.
• The deduction is made at the earlier of credit or actual payment.
• Individuals and HUFs outside tax audit deduct under §194-IB instead, at 2% (cut from 5% by section 59 of the Finance (No. 2) Act 2024 with effect from 1-Oct-2024) on rent above ₹50,000 per month.

Reference: §194I, ITA 1961 (threshold as amended by Finance Act 2025 s.64) — under ITA 2025 (FY 26-27 onwards), this is §393(1) Sl.2