Two of the most commonly used TDS sections — Section 194-I (rent) and Section 194J (professional and technical fees) — get new homes under the Income-tax Act, 2025: both move into the Section 393(1) consolidated table, each with its own payment code. The deduction rates and thresholds you already know are reported to carry forward. Here's the mapping, with worked examples for both.
TDS on Rent: Old Section 194-I
Under the Income-tax Act, 1961, Section 194-I required tenants (other than individuals/HUFs not subject to audit, with some exceptions for high-rent individual tenants) to deduct TDS on rent payments:
- 2% — rent for plant, machinery, or equipment
- 10% — rent for land, building, furniture, or fittings
- Threshold: TDS applies if annual rent exceeds ₹2,40,000
Separately, Section 194-IB required individuals/HUFs (not otherwise subject to TDS audit requirements) paying rent above ₹50,000/month to deduct TDS at 5% (reduced from 5% to 2% in recent years) — typically deducted once at year-end or on the last month of tenancy.
TDS on Professional/Technical Fees: Old Section 194J
Section 194J required deduction of TDS at:
- 10% — fees for professional services, royalty, or non-compete fees
- 2% — fees for technical services, call centre payments, or certain royalty for sale/distribution/exhibition of cinematographic films
- Threshold: TDS applies if payment in a financial year exceeds ₹30,000 per payee (₹50,000 for certain categories per recent amendments)
New Section 393(1) References
Both transaction types move into the consolidated Section 393(1) table, each assigned its own table serial number and numeric payment code (analogous to how contractor payments under old Section 194C became Section 393(1), Sl. No. 6(i), Code 1017, as covered in our dedicated article). The rates and thresholds described above — 2%/10% for rent depending on asset type, the ₹2,40,000 annual threshold, and the 10%/2% rates with ₹30,000 threshold for professional/technical fees — are reported to be carried forward unchanged; only the section/code citation on TDS returns and certificates changes.
⚠ Practical impact: If your business pays office rent and also engages consultants, auditors, or technical service providers, both these TDS categories will appear under Section 393(1) with different payment codes from 1 April 2026 — your accounting software should map these automatically, but it's worth confirming with your TDS software vendor before the first FY2026-27 quarterly return.
Worked Example: Office Rent
A company pays ₹50,000/month (₹6,00,000/year) for office premises:
- Old approach: Since annual rent (₹6,00,000) exceeds ₹2,40,000, deduct TDS at 10% (building rent) = ₹5,000/month, under Section 194-I.
- New approach (FY2026-27): Same 10% rate, same ₹5,000/month deduction — reported under Section 393(1) with the applicable payment code for building/land rent.
Worked Example: CA Professional Fees
A business pays its CA firm ₹80,000 for the year for audit and tax advisory services:
- Old approach: Since the payment exceeds ₹30,000, deduct TDS at 10% = ₹8,000, under Section 194J.
- New approach (FY2026-27): Same 10% rate, same ₹8,000 deduction — reported under Section 393(1) with the applicable payment code for professional fees.
What About Section 194-IB (Individual Tenants)?
For individuals/HUFs paying rent above ₹50,000/month who aren't otherwise required to deduct TDS under the standard Section 194-I framework, the simplified once-a-year TDS deduction mechanism (at the rate applicable, historically 2% in recent years) is reported to continue under the Income-tax Act, 2025's renumbered provisions — including the simplified compliance (no TAN required, deduction via Form 26QC-equivalent challan-cum-statement).
Frequently Asked Questions
Has the TDS rate on office rent (10% for buildings, 2% for plant/machinery) changed under the Income-tax Act 2025? ▼
No. The 10% rate for rent on land/buildings/furniture and 2% rate for plant/machinery/equipment, along with the ₹2,40,000 annual threshold, are reported to be carried forward unchanged under the Income-tax Act, 2025. The transaction moves to Section 393(1) with a new payment code, but the rate and threshold logic remains the same.
What happens to the simplified TDS on rent for individual tenants paying above Rs 50,000/month (old Section 194-IB)? ▼
The simplified once-a-year TDS mechanism for individuals/HUFs paying high rent — including the exemption from requiring a TAN and the challan-cum-statement based compliance — is reported to continue under the Income-tax Act, 2025's renumbered provisions, with the rate and ₹50,000/month threshold unchanged.
Does the Rs 30,000 threshold for TDS on professional fees (old Section 194J) still apply under the new Act? ▼
Yes, the ₹30,000 per-payee annual threshold for TDS on professional/technical fees, along with the 10% rate for professional services and 2% rate for technical services, is reported to be carried forward unchanged. The transaction is reported under Section 393(1) with a new payment code from 1 April 2026.