Rent is a major expense whether it’s for the house in which you live or for your business place and there are two sections which govern TDS on such rent.
Before going to the difference between this 2 sections lets discuss what this two sections basically are:
Section 194-I: 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 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.
Section 194IB: Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.
For the purposes of this section, “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.
From the above definitions it is clear that TDS u/s 194IB shall be applicable only on Individual and HUF to whom TDS u/s 194-I is not applicable. Thus, it is applicable for rent of land or building whether used for business purpose or not.
| Under Section 194-I | Under Section 194IB | |
| Who needs to deduct TDS
(Individual and HUF) |
If total turnover exceeds Rs. 1 crore for business and Rs. 50 lakh for profession | No such limit |
| Who needs to deduct TDS
(Other than Individual and HUF) |
All other assessee needs to deduct TDS | Not applicable |
| Limit of Rent | Rs. 2.4 lakh per anum | Rs. 50,000 per month |
| Applicable on which asset | Land, Building, Plant and machinery | Land and building |
| Rate of TDS | 2% plant and machinery
10% Land, Building, furniture and fitting |
5% on land and building |
| TDS needs to be deducted | At the time of credit or payment whichever is earlier | At the time of credit for the rent of last month or last month of tenancy
Or At the time of payment whichever is earlier |
| Due date for payment of TDS | Within 7 days from end of month in which deducted.
For March month due date shall be 30th April |
30 daays from the end of month in which TDS deducted |
| TAN required | Yes | No |
| Form which needs to be used | 26Q | 26QC |
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