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Rent TDS under payment code 1009 (formerly Section 194I(b)) is a recurring monthly deduction stream with a 10% rate and an annual ₹2,40,000 aggregate threshold. The threshold is annual but the deduction is monthly, so the first month of a new tenancy where the projected annual rent crosses ₹2,40,000 needs TDS from month one — a common ERP misconfiguration.
Reconciliation joins the rent ledger (rental accruals and payouts) with the TDS challan register and Form 168 lines on a composite key of deductor TAN, payment code 1009, month-of-deduction, and deductee PAN. The matching engine projects annual rent from the monthly rate, applies the ₹2,40,000 threshold check at month one, validates the 10% rate, and tracks the joint-owner allocation against per-co-owner thresholds.
Landlord master annotated with PAN, GSTIN (where applicable), joint-owner shares, and the monthly base rent. Reconciliation ruleset configured with payment code 1009 mapped to legacy 194I(b) for cross-era matching, 10% rate validation, and explicit handling of the security-deposit-versus-rent classification at the invoice line level.
Form 168 rent lines fully matched to the rent ledger, joint-owner allocations documented, GST-versus-base allocation reconciled at invoice level, and a clean audit pack showing every monthly rent deduction with the landlord PAN, the annualised threshold check, and the gross-rent base.
Quick reference: Payment Code 1009 at a glance
| Attribute | Value |
|---|---|
| Payment code | 1009 |
| Parent section | 393 |
| Sub-clause | 393(1)(e) |
| Legacy section | 194I(b) |
| Rate | 10% on gross rent |
| Threshold | ₹2,40,000 aggregate per landlord per FY |
| Applicability | Resident landlords — land, building (incl. factory), furniture let with building |
| Effective from | April 1, 2026 |
| Form 168 description | Rent on land, building, furniture |
| Challan | ITNS 281, payment code field = 1009 |
What payment code 1009 covers
Payment code 1009 under Section 393(1)(e) captures rent paid to resident landlords for immovable property and any furniture or fittings let along with the property. The coverage is wide: office leases, warehouse rentals, retail store leases, factory building rent, residential property let to a corporate occupier (where TDS applies because the corporate occupier is the deductor), shared office space rent, kiosk and cart rentals on commercial premises, and serviced apartment leases beyond the casual occupancy threshold.
The legal scope mirrors the 1961 Act’s Section 194I(b): rent means any payment, by whatever name called, under any lease, sub-lease, tenancy, or any other agreement or arrangement for the use of (a) land, (b) building, (c) machinery, (d) plant, (e) equipment, (f) furniture, or (g) fittings. Code 1009 specifically covers branches (a), (b), and (f) — land, building, and furniture let with the building. Plant and machinery (sub-branches c, d, e) sit under a separate sub-clause at 2%.
A worked example for FY 2026-27: A growing services company signs a new office lease in Bengaluru at ₹3,50,000 per month from April 1, 2026. Annualised rent of ₹42,00,000 crosses the ₹2,40,000 threshold at month one. TDS at 10% (₹35,000 per month) is deducted starting with April’s rent payment. Twelve monthly challans, each with payment code 1009 under Section 393, are filed across the FY. The landlord sees twelve lines in Form 168.
Rate, threshold, and applicability rules
The 10% rate is flat — there is no individual/HUF versus others distinction (unlike contractor payments at code 1002). The rate applies on gross rent excluding GST. If the landlord is GST-registered and charges 18% GST on rent, the TDS base is the pre-GST rent. A ₹2,00,000 base rent + ₹36,000 GST = ₹2,36,000 invoice carries TDS of ₹20,000 (10% of ₹2,00,000), not ₹23,600.
The ₹2,40,000 annual aggregate threshold is forward-looking. A tenant entering a new lease in April 2026 at ₹25,000 per month must project the annual rent (₹3,00,000) at signing; since the projection exceeds ₹2,40,000, TDS starts from the first month’s payment, not from the month the cumulative payments cross ₹2,40,000. This is the most-misconfigured rule in legacy ERPs.
Joint-ownership of property is common in Indian commercial real estate. A property co-owned 50:50 by two individuals receiving total rent of ₹4,00,000 annually is treated as ₹2,00,000 to each co-owner. Each co-owner is below the ₹2,40,000 threshold, so no TDS applies — but only if rent agreements explicitly split the receipt and the tenant deposits the rent in the co-owners’ separate accounts. A single combined rent payment requires TDS treatment.
What payment code 1009 replaced (1961 Act → 2025 Act)
Section 194I(b) under the 1961 Act has governed rent TDS on land and building since 1994. The 2025 Act absorbs 194I(b) into Section 393(1)(e) without changing rates, thresholds, or the joint-owner treatment. The plant-and-machinery branch (194I(a) at 2%) migrates to a sibling sub-clause at the same 2% rate.
Cross-era reconciliation: March 2026 rent paid in March falls under Section 194I(b) — challan and Q4 FY 2025-26 return reference the legacy section. April 2026 rent paid in April falls under code 1009. Annual rent statements from landlords for FY 2025-26 carry 194I(b); FY 2026-27 statements carry code 1009. The Section 393 TDS reconciliation framework explains how cross-era matching engines reconcile these.
A practical subtlety: serviced apartments and extended-stay accommodations may be invoiced as room nights rather than monthly rent. The TDS treatment depends on whether the relationship is a lease (code 1009) or a hospitality service (potentially code 1002 contractor or even out-of-scope for TDS depending on structure). The service apartment and extended-stay reconciliation article covers the boundary in depth.
Form 168 reconciliation for payment code 1009
Form 168 for a corporate tenant aggregates rent TDS lines across all landlords filtered by payment code 1009. For a typical occupier with one head office plus a warehouse, expect two streams of 12 monthly lines each per FY. Reconciliation join: deductor TAN plus deductee PAN plus month-of-deduction.
Pitfalls when joining Form 168 code 1009 lines to the rent ledger:
- Joint owner not split: Form 168 shows one combined line under a single PAN; the rent agreement was meant to split 50:50. Either the tenant paid combined or the deductor erred.
- GST inclusion in TDS base: the deductor applied 10% on the GST-inclusive invoice total rather than the base rent. Over-deducts by 1.8 percentage points effective.
- Advance rent timing: a six-month advance paid in March covers April–September. The TDS event is the date of payment (March), so the deduction is in Q4 FY 2025-26 under legacy 194I(b), not in Q1 FY 2026-27 under code 1009 — even though the rent period itself is post-April.
Common reconciliation issues for payment code 1009
The recurring patterns on code 1009:
- Projected-annual threshold failure. A new tenancy at ₹22,000 per month (projected ₹2,64,000 annually) needs TDS from month one. ERPs that wait for cumulative ₹2,40,000 under-deduct April through October.
- Joint-owner allocation drift. Co-owner shares change at property succession; rent agreements not updated.
- Security deposit confusion. Refundable security deposits are not rent and do not trigger code 1009 TDS. Non-refundable signing premiums and lease deposits that get adjusted against rent are rent.
- Common-area maintenance (CAM) charges. CAM and facility charges paid to the landlord under the same lease are rent (10% under 1009); CAM paid separately to a facility manager under a service contract is contractor payment (2% under 1002).
For more on rent reconciliation in real estate contexts, see TDS reconciliation software and reconciliation software India.
For the full set of codes across Sections 392 / 393 / 394 / 413, see the TDS payment codes 1001–1092 master reference. Authoritative text is on the Income Tax India e-filing portal, where the Income Tax Act 2025 enrolled text and CBDT notifications on payment code 1009 are published.
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