A partnership firm is paying rent to a partner
This query is : Resolved
Quick Summary
16 April 2026
if a partnership firm is paying rent to partner tds applicability AY 2026-27 and threshold limit
16 April 2026
TDS under Section 194I applies to rent payments by any payer, including partnership firms, when paying rent to a partner (treated as any other payee). For AY 2026-27 (FY 2025-26), the threshold is Rs. 6 lakh annually (or Rs. 50,000 per month), as updated in Budget 2025.
TDS Rates for Rent
10% for land, building, or furniture/plant/machinery.
2% for plant, machinery, or equipment (other than land/building/furniture).
TDS Rates for Rent
10% for land, building, or furniture/plant/machinery.
2% for plant, machinery, or equipment (other than land/building/furniture).
14 November 2026
Correction on the threshold: from 1 April 2025 there is no annual Rs 6 lakh test. Sec 194-I applies when rent for a month or part of a month exceeds Rs 50,000.
TDS on rent to a partner
• Rent paid by the firm to a partner is covered by Sec 194-I like any other landlord. Rates: 10% for land, building or furniture; 2% for plant, machinery or equipment.
• Months where rent exceeds Rs 50,000: deduct on that month's rent.
• Sec 194T (partners' remuneration and interest) does not cover rent, so rent stays under 194-I.
Other points
• Rent to a partner must be at market rate. The excess is disallowed under Sec 40A(2)(b).
• The partner shows the rent under house property (30% standard deduction).
• Without the partner's PAN, TDS is 20%.
• From 1 April 2026, rent TDS is under Sec 393 of the Income-tax Act, 2025 with the same monthly threshold.
TDS on rent to a partner
• Rent paid by the firm to a partner is covered by Sec 194-I like any other landlord. Rates: 10% for land, building or furniture; 2% for plant, machinery or equipment.
• Months where rent exceeds Rs 50,000: deduct on that month's rent.
• Sec 194T (partners' remuneration and interest) does not cover rent, so rent stays under 194-I.
Other points
• Rent to a partner must be at market rate. The excess is disallowed under Sec 40A(2)(b).
• The partner shows the rent under house property (30% standard deduction).
• Without the partner's PAN, TDS is 20%.
• From 1 April 2026, rent TDS is under Sec 393 of the Income-tax Act, 2025 with the same monthly threshold.
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