TDS on Rent & Professional Fees: New Section 393 Codes Replacing 194-I and 194J
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. Note that both thresholds were already raised by the Finance Act, 2025 (effective 1 April 2025) before the renumbering — the current, higher thresholds are what carry forward into Section 393, not the older pre-FY2025-26 figures. 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
- Original threshold (before FY2025-26): TDS applied if annual rent exceeded ₹2,40,000
- Current threshold (Finance Act 2025, effective 1 April 2025 — carries into Section 393): TDS applies if rent for a month or part of a month exceeds ₹50,000
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
- Original threshold (before FY2025-26): TDS applied if payment in a financial year exceeded ₹30,000 per payee
- Current threshold (Finance Act 2025, effective 1 April 2025 — carries into Section 393): TDS applies if payment in a financial year exceeds ₹50,000 per payee
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 described above — 2%/10% for rent depending on asset type, and 10%/2% for professional/technical fees — are reported to be carried forward unchanged. The thresholds that carry forward are the current, Finance Act 2025-amended figures already in force since 1 April 2025 — ₹50,000 for a month or part of a month for rent, and ₹50,000 per financial year for professional/technical fees — not the older pre-FY2025-26 figures (₹2,40,000/year and ₹30,000/year respectively). Only the section/code citation on TDS returns and certificates changes at the FY2026-27 transition.
Worked Example: Office Rent
A company pays ₹65,000/month (₹7,80,000/year) for office premises:
- Pre-FY2025-26 rule: Since annual rent (₹7,80,000) exceeded the old ₹2,40,000 threshold, TDS was deducted at 10% (building rent) = ₹6,500/month, under Section 194-I.
- Current rule (FY2025-26 onward, carrying into Section 393 from FY2026-27): Since monthly rent (₹65,000) exceeds the current ₹50,000/month threshold, deduct TDS at 10% = ₹6,500/month — reported under Section 393(1) with the applicable payment code for building/land rent from FY2026-27. Note: a monthly rent of exactly ₹50,000 does not exceed the threshold and would not attract TDS under this rule.
Worked Example: CA Professional Fees
A business pays its CA firm ₹80,000 for the year for audit and tax advisory services:
- Pre-FY2025-26 rule: Since the payment exceeded the old ₹30,000 threshold, TDS was deducted at 10% = ₹8,000, under Section 194J.
- Current rule (FY2025-26 onward, carrying into Section 393 from FY2026-27): Since the payment (₹80,000) also exceeds the current ₹50,000/year threshold, deduct TDS at 10% = ₹8,000 — reported under Section 393(1) with the applicable payment code for professional fees from FY2026-27.
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).