TDS
TDS on Rent of Plant & Machinery — Section 194I
Section 194I requires 2% TDS on rent for plant, machinery or equipment once it exceeds ₹50,000 in any month — changed from an annual ₹2,40,000 threshold to this monthly test, effective 1 April 2025.
Section 194I covers rent paid for the use of plant, machinery or equipment in a business — construction equipment, industrial machinery, and similar rented assets. Rent for land, buildings or furniture is covered by the same section but at a different rate (see Section 194I — Rent of land, building, furniture).
Budget 2025 replaced the old annual ₹2,40,000 threshold with a monthly ₹50,000 test, effective 1 April 2025 — TDS is now evaluated per month rather than accumulated across the year, and applies to that month's full rent once it crosses ₹50,000.
From FY 2026-27, this is Section 393(1), Table 1, Sl. 2(ii)(a) under the Income-tax Act, 2025, filed against payment code 1008.
Worked example
On a ₹65,000.00 payment at 2%, TDS is ₹1,300.00 and the net payment is ₹63,700.00. ₹65,000/month rent for construction equipment: since this exceeds the ₹50,000 monthly threshold, 2% TDS applies on that month's rent.
Frequently asked questions
Is the threshold still based on the whole year's rent?
No — since 1 April 2025 it's tested month by month. If rent in a given month exceeds ₹50,000, TDS applies for that month, regardless of what other months looked like.
What if machinery rent varies from month to month?
Each month is tested independently against the ₹50,000 threshold — a month that crosses it owes TDS on that month's rent, and a month that doesn't, owes nothing, even within the same rental agreement.
How is this different from the land/building rate under the same section?
Same section, same monthly threshold — only the rate differs: 2% for plant/machinery/equipment, 10% for land, buildings or furniture.