Your Guide to Section 194I of the Income Tax Act
Introduced by the Finance Act, 1994, the Section 194-I emphasizes that an entity, whether an individual or H.U.F. who receives rental income is liable for a tax deduction at source (‘TDS’) when the income credited is more than Rs.1,80,000 during a financial year. Definition of ‘Rent’ in regard to section 194I? Any payment under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any – land, building (including factory building), land appurtenant to a building, machinery, plant, equipment, furniture or fittings whether owned by the payee. Unlike the advance rent, no tax is to be deducted on refundable security deposits u/s 194I. Moreover, where any such rent is credited to ‘suspense account’ or to any other account shall also be liable to TDS. At what point TDS is to be deducted? One should deduct TDS and pay tax direct online at the time of credit of rental income to the payee’s account or at the time