194I vs 194-IB: TDS on Rent — Which Section Applies?
2026-06-30 · 6 min read · by a CA firm
Two sections cover TDS on rent, and which one you use depends entirely on who is paying — not on the property. Get the wrong one and you either need a TAN you don’t have, or you miss a deduction. Both now sit within Section 393 of the Income-tax Act 2025.
The quick answer
If you are a business, firm, company, or anyone liable to tax audit, you deduct under 194I. If you are an individual or HUF not liable to tax audit (typically a salaried person or small landlord-tenant), you deduct under 194-IB. They never both apply to the same payer for the same rent.
Side by side
| Section 194I | Section 194-IB | |
|---|---|---|
| Who deducts | Business / anyone under tax audit | Individual or HUF not under tax audit |
| Rate (with PAN) | 2% plant & machinery; 10% land, building, furniture | Flat 2% (reduced from 5%) |
| No-PAN rate | 20% | 20% (capped at the last month’s rent) |
| Threshold | Rent over ₹50,000 a month | Rent over ₹50,000 a month |
| How often | Every month (at credit or payment) | Once a year — last month of FY or tenancy |
| TAN needed? | Yes | No |
| Reporting | Form 140 (quarterly), code 1008/1009 | Form 26QC challan-cum-statement; certificate Form 16C |
Section 194I in detail
194I applies to business deductors paying rent for land, buildings, plant, machinery, equipment, furniture or fittings. The rate is 2% for plant, machinery and equipment and 10% for land, building, furniture and fittings. You deduct each month at the time of credit or payment, deposit by the 7th of the next month using code 1008 (2%) or 1009 (10%), and report in Form 140. A TAN is mandatory.
Section 194-IB in detail
194-IB exists so an ordinary tenant — an individual or HUF not under audit — can deduct without the full deductor machinery. The rate is a flat 2% (reduced from the earlier 5%). Crucially, you deduct only once a year, in the last month of the financial year or of the tenancy, whichever is earlier — not every month. No TAN is required; you pay and report through the Form 26QC challan-cum-statement and issue the landlord a Form 16C certificate. If the landlord has no PAN, TDS is 20% but is capped at the last month’s rent.
Worked examples
Company tenant (194I): office rent of ₹90,000 a month. TDS at 10% = ₹9,000 each month, deposited monthly under code 1009 in Form 140.
Salaried tenant (194-IB): flat rent of ₹70,000 a month for the full year. At year-end, deduct 2% on the year’s rent in one go via Form 26QC — no TAN, one filing.
Common mistakes
An individual under tax audit wrongly using 194-IB (they should use 194I); a business deducting 194-IB to avoid TAN; a 194-IB tenant deducting monthly instead of once a year; and forgetting the Form 16C certificate to the landlord. Also remember the threshold is the monthly rent — cross ₹50,000 a month and the section applies.
Frequently asked questions
194I or 194-IB? Business/audited payer → 194I; individual/HUF not under audit → 194-IB.
Rates? 194I: 2% / 10%. 194-IB: flat 2%. No PAN → 20%.
How often under 194-IB? Once a year, last month of FY or tenancy; no TAN; Form 26QC.
Threshold? Rent over ₹50,000 a month for both.
See the section guides for the at-a-glance numbers: 194I and 194-IB. Related: TDS glossary and the TDS Wizard to confirm your exact rate.
General information for FY 2026-27 under the Income-tax Act 2025, not advice on your specific case. Verify against the latest law or talk to a CA.