Compliance
TDS on clinic rent: who deducts, and at what rate Section 393 of the Income-tax Act, 2025, the old 194-I and 194-IB rows, and the ₹50,000 a month line.
Rent is usually the clinic's biggest fixed cheque, and the TDS question comes up the day a landlord asks why the amount is short, or a CA asks why it is not. Under the Income-tax Act, 2025 the answer turns on two facts: whether the rent crosses ₹50,000 for a month, and who is paying it.
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- No TDS on rent unless it exceeds ₹50,000 for a month or part of a month: section 393(1), Table Sl. No. 2 of the Income-tax Act, 2025.
- A "specified person" (any company, firm, LLP, trust or society, or a doctor whose professional receipts exceeded ₹50 lakh last year) deducts 10% on rent for a building and 2% on rent for equipment (Sl. No. 2(ii), the old 194-I).
- Any other payer, such as a doctor with smaller receipts, deducts 2% and does it once, on the rent for the last month of the tax year or of the tenancy (Sl. No. 2(i), the old 194-IB). That payer does not need a TAN.
A clinic deducts TDS on rent only when the rent for a month is more than ₹50,000. If the clinic is run by a company, partnership firm, LLP, trust or society, or by a doctor whose professional receipts in the previous tax year exceeded ₹50 lakh, it deducts 10% on rent for the premises. Any other individual doctor deducts 2%, once a year, on the last month's rent. Both rules are in section 393(1), Table Sl. No. 2 of the Income-tax Act, 2025, which replaced sections 194-I and 194-IB of the 1961 Act for payments from 1 April 2026.
What does the Act say about rent?
Section 393(1) is a table of payments to residents. Serial number 2 is rent, and it has two rows, split by who pays.
| Row (old section) | Payer | Rate | Threshold | When to deduct |
|---|---|---|---|---|
| 2(ii) (old 194-I) | Specified person | 10% for land, building (including factory building), land appurtenant to a building, furniture or fittings; 2% for machinery, plant or equipment | ₹50,000 for a month or part of a month | At credit or payment, whichever is earlier (section 393(1)(c)) |
| 2(i) (old 194-IB) | Person other than a specified person | 2% | ₹50,000 for a month or part of a month | Note 1: at credit or payment "for the last month of the tax year or the last month of tenancy" |
Clause (a) of section 393(1) says tax is deducted "on the entire amount of such income or sum, where the amount or aggregate of amounts exceeds the threshold limit". Once rent crosses ₹50,000 for a month, TDS is on the whole rent for that month, not on the excess.
Is my clinic a specified person?
Section 402(37) defines a specified person as "(a) any person, not being an individual or Hindu undivided family; or (b) an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the tax year immediately preceding". The test for an individual doctor is last year's professional receipts.
| Who pays the rent | Row | Rate on clinic premises |
|---|---|---|
| Private limited company, LLP, partnership firm, trust or society | 2(ii) | 10% |
| Individual doctor, professional receipts above ₹50 lakh in the previous tax year | 2(ii) | 10% |
| Individual doctor, professional receipts ₹50 lakh or less in the previous tax year | 2(i) | 2%, once, on the last month's rent |
Whether the doctor declares income under the presumptive scheme does not change this. The definition looks at gross receipts, not at how profit is computed. A doctor who crosses ₹50 lakh of receipts this year moves to the 10% row from next year.
How does the deduction work in rupees?
Illustration only, using the rates above. Take a clinic paying ₹60,000 a month for a ground-floor shop, for the full tax year.
| Firm or company clinic (row 2(ii)) | Individual doctor, receipts under ₹50 lakh (row 2(i)) | |
|---|---|---|
| Rate | 10% | 2% |
| When | Every month, at credit or payment | Once, on the March rent (or the last month of tenancy) |
| TDS | ₹6,000 a month; ₹72,000 in the year | Per Note 1, on the last month's rent: ₹1,200 if computed on that month's ₹60,000 alone |
| Landlord receives in a normal month | ₹54,000 | ₹60,000 (and less in the deduction month) |
Note 1 to row 2(i) fixes the time of deduction as the last month of the year or tenancy. How much is deducted at that point, on the last month or on the whole year's rent, depends on how the Income-tax Rules, 2026 and the CBDT's forms apply the row. We have not read those for this post, so confirm the amount with your CA before the March payment.
Rent of ₹50,000 a month exactly is not over the threshold. Rent of ₹50,001 is. If the clinic rents equipment as well as the room, the equipment rent is a separate payment at 2% under row 2(ii)(a).
Do I need a TAN?
A specified person does. Section 397(1)(a) says every person deducting tax shall apply for a tax deduction and collection account number, and section 397(1)(c)(i) exempts "a person who is required to deduct tax under provisions of section 393(1) [Table: Sl. No. 2(i), 3(i) and 6(ii)]". The individual doctor on the 2% rent row is in that exemption. A firm or company clinic deducting 10% needs a TAN, a monthly deposit and a quarterly statement, the same cycle described in our post on TDS when a clinic pays a visiting consultant.
Section 397(2) also requires the landlord to give the payer a valid PAN. Without it, section 397(2)(b) raises the rate to the higher of the specified rate, the rates in force, or 20% for most rows.
What to check before you sign or pay
- Write the monthly rent and any separate equipment or furniture charge as separate figures in the agreement. They fall under different rates.
- Take the landlord's PAN with the agreement, not at the first deduction.
- Decide which row applies at the start of each tax year, from last year's receipts and the clinic's legal form.
- State in the agreement that rent is paid after TDS where the Act requires it, so the landlord is not surprised by a short credit.
- Pay rent by bank transfer. The bank entry is your record of credit or payment for the timing rule.
What else belongs in the agreement itself, including registration and stamp duty, is in our post on the rent agreement for clinic premises.
Questions
Is there TDS on clinic rent below ₹50,000 a month?
No. Both rent rows in section 393(1), Table Sl. No. 2 of the Income-tax Act, 2025 set the threshold at ₹50,000 for a month or part of a month.
Does a doctor on section 44ADA (now section 58) have to deduct TDS on rent?
Yes, if rent is above ₹50,000 a month. The presumptive scheme decides how the doctor's profit is computed, not whether the doctor deducts tax. The rate is 2% under row 2(i) unless last year's professional receipts exceeded ₹50 lakh, in which case it is 10% under row 2(ii).
What were the old section numbers?
Section 194-I for rent paid by businesses and larger professionals, and section 194-IB for rent paid by other individuals and HUFs, both in the Income-tax Act, 1961. From 1 April 2026 they are rows 2(ii) and 2(i) of the table in section 393(1) of the 2025 Act.
Sources
- Ministry of Law and Justice, The Income-tax Act, 2025 (No. 30 of 2025), Gazette of India Extraordinary Part II Section 1, No. 35, 21 August 2025: section 393(1) Table Sl. No. 2 and Note 1, section 397, section 402(37) (accessed 30 Oct 2026)
- Income Tax Department, e-filing portal, Income Tax Returns FAQ (Income Tax Act 2025): transition from the 1961 Act for tax year 2026-27 (accessed 30 Oct 2026)
This is operational guidance for clinics, not legal or tax advice. Confirm with your state authority, council or CA.
Drafted with AI assistance; every fact checked against the sources listed; reviewed by the Vitels team.