TDS on Rent and Professional Fees: What’s Changed, What Hasn’t, and What You Need to Track

A simple look at two common TDS rules under both the old and new tax law

If you run a business, rent out property, or work as a professional, you’ve likely dealt with TDS on rent or on professional fees. These two rules affect almost everyone from a small shop owner paying rent, to a company paying a consultant or a chartered accountant.

This year, both rules have changed their address, not their meaning. Since the new Income-tax Act, 2025 came into force on 1 April, the old Section 194-I (rent) and Section 194J (professional fees) now go by a new name. But the rates and limits are mostly the same. Here’s what you actually need to know.

For last year’s accounts, the old rule still applies

If you’re closing your books for FY 2025-26 (the year that ended 31 March 2026), you’re still working under the old Income-tax Act, 1961. So Section 194-I and Section 194J fully apply, including right now, during tax audit season.

Under Section 194-I:

• Rent for land, a building, or furniture: TDS at 10%
• Rent for plant, machinery, or equipment: TDS at 2%
• A simpler rule, Section 194-IB, applies to individuals and families renting a house, with lighter compliance.

Under Section 194J:

• Professional fees (doctors, lawyers, architects, consultants, CAs): TDS at 10%
• Technical service fees: TDS at 2%

One helpful change came in the last Budget. The yearly limit before TDS on rent kicks in jumped from ₹2,40,000 to ₹6,00,000 (or ₹50,000 a month). Many small shops and startups no longer need to deduct TDS on rent at all. The limit for professional fees also went up, from ₹30,000 to ₹50,000 a year.

The new rule: everything under one section, Section 393

From 1 April 2026, income falls under the new Income-tax Act, 2025. The big change here is organisation, not amount.

Earlier, TDS rules were spread across many sections 192 to 196D. Now, salary TDS sits under Section 392, and almost everything else including rent and professional fees sits under one section, Section 393, laid out as a table.

• Rent now falls under Table Sl. No. 2(ii)
• Professional and technical fees fall under Table Sl. No. 6(iii)

So instead of saying “194-I” or “194J,” you now refer to Section 393 and the right table entry.

But here’s the reassuring part: the actual numbers haven’t moved.

• Rent: still 2% for machinery, 10% for land/building/furniture
• Professional fees: still 10%
• Technical fees: still 2%
• The higher limits (₹6,00,000 for rent, ₹50,000 for professional fees) continue unchanged.

In short, the new law reorganised where the rule lives, it didn’t change what the rule says.

Why the date of payment matters

The tricky part isn’t the rate, it’s figuring out which law applies to a particular payment, especially for old contracts like office leases or consultant retainers signed years ago.

The rule is simple: it depends on when the rent or fee is actually credited or paid, not when the agreement was signed.

• Paid or credited before 31 March 2026 → old Act, old section numbers apply
• Paid or credited on or after 1 April 2026 → new Act, Section 393 applies

This means accountants are currently doing two things at once: closing FY 2025-26 books under the old section numbers, and deducting TDS for the current year under Section 393. Most accounting software has already updated to show the new section, but old invoice templates, agreements, and internal checklists may still say “194-I” or “194J.” These need updating so there’s no confusion, especially if a landlord or vendor asks which rule applies to their payment.

What hasn’t changed at all

A few basics remain exactly the same, no matter which Act applies:

• TDS must be deducted at the time of payment or credit, whichever comes first
• The deducted amount must be deposited with the government, usually by the 7th of the next month
• Quarterly TDS returns still need to be filed
• TDS certificates (Form 16A) still need to be given to the person whose tax was deducted

If you don’t deduct TDS, or deduct it but don’t deposit it on time, you’ll still face interest, and the related expense can get disallowed while calculating your taxable income. This often costs businesses far more than the TDS amount itself. These penalties haven’t changed under the new law; they’ve just been renumbered.

What you should do now

A few simple steps can save you trouble later:

1. Update your templates, agreements, and accounting records to reference Section 393 for anything related to the current year, while keeping old section numbers for FY 2025-26 entries.
2. Check your rent payments against the new ₹ 50,000 monthly limit, many landlords still don’t know about this higher threshold, so you may no longer need to deduct TDS at all.
3. Double-check whether a payment is “professional” (10%) or “technical” (2%)  this distinction hasn’t changed, and it’s still a common source of mistakes.
4. If you’re a professional receiving payments, make sure your TDS certificates show the correct details and match your annual tax statement, which now comes under a new form number too.

The bottom line

If you were worried that rent or professional fees would suddenly cost more in tax this year, you can relax they won’t. The rates are the same. The higher limits from last year’s Budget still apply. All that’s really changed is the address: Section 194-I and Section 194J have moved into Section 393 under the new Income-tax Act, 2025.

The real risk this year isn’t the law, it’s outdated paperwork. Old section numbers sitting in templates, contracts, and notes long after the rule itself has moved can cause confusion down the line. A short afternoon spent updating these references now can save a lot of back-and-forth later.