Section 194-I is to deduct tax on rent payment for hiring plant, machinery or equipment at a rate of 2% and 10% for rent paid for use of land, building or furniture & fittings. TDS will be deducted if the rent exceeds the threshold limit of Rs 6 lacs in the financial year or Rs 50,000 monthly. Under this, TDS is to be deducted by any person, including individuals or HUFs, whose sales or turnover from business exceeds Rs.1 crore or whose gross receipts from profession exceed Rs. 50 lacs during the financial year immediately preceding the financial year in which such rent is liable to be paid.
When the rent is paid to an NRI, TDS at 30% must be deducted, irrespective of the amount paid. Surcharge and cess should also be deducted over and above TDS.
Note: Individuals and HUFs not eligible for TDS deduction under section 194-I shall be subject to TDS on rent payment under section 194-IB, and rent is paid to an NRI; TDS at 30% must be deducted, irrespective of the amount paid. Surcharge and cess should also be deducted over and above TDS.