TDS on Laptop Rental in India: Section 194I, Rate and Threshold
Last updated: 2026-09-26
Which TDS section applies to laptop rental?
Laptop rental falls under Section 194I of the Income Tax Act, in the "plant, machinery or equipment" category, taxed at 2%. It is not Section 194C, which covers contract work, and not 194J, which covers professional or technical services. The distinction matters because 194C and 194J carry different rates, and deducting under the wrong section creates a mismatch your auditor will raise.
If the arrangement bundles significant manpower or managed services alongside the hardware, the dominant element decides the section. Pure equipment hire is 194I.
What is the TDS rate on laptop rent?
2% of the rental value, excluding GST. Section 194I applies 2% to plant, machinery and equipment, and 10% only to land, building and furniture. Laptops are equipment, so 2% is correct.
TDS is deducted on the taxable value, not the GST-inclusive total. On a ₹1,00,000 monthly invoice with ₹18,000 GST, TDS is 2% of ₹1,00,000 = ₹2,000, and the amount paid is ₹1,16,000.
What is the threshold before TDS applies?
Section 194I has an annual threshold below which no deduction is required, assessed per payee per financial year. That figure has been revised in recent Finance Acts, so confirm the limit for the current financial year with your CA before setting up the deduction — quoting a stale number is the most common error on this topic.
The practical point: the threshold is annual and aggregate. A ₹25,000 monthly rental crosses it during the year even though no single invoice looks large.
Worked example: 100 laptops on a 12-month contract
The rate below is an illustrative example, not a Techvity rate. It is a round number chosen to make the arithmetic easy to follow; your own quote will differ.
| Line | Amount |
|---|---|
| Rate per laptop per month (illustrative example, not a Techvity rate) | ₹2,500 |
| Monthly rental, 100 units | ₹2,50,000 |
| GST at 18% (SAC 997315) | ₹45,000 |
| Invoice total | ₹2,95,000 |
| TDS at 2% on ₹2,50,000 | ₹5,000 |
| Net paid to Techvity | ₹2,90,000 |
| Annual rental value | ₹30,00,000 |
| Annual TDS deducted | ₹60,000 |
In this example the customer deducts ₹5,000 each month, deposits it against Techvity's PAN, and issues Form 16A quarterly. Techvity claims that ₹60,000 against its own tax liability.
How do TDS and GST interact on the same invoice?
They apply to different bases and move in opposite directions. GST is added to the invoice at 18% and is fully recoverable by a GST-registered customer as input tax credit. TDS is withheld from the payment at 2% of the pre-GST value and is recoverable by the supplier against its income tax.
So on a ₹1,00,000 rental invoice (₹1,18,000 including GST), the customer pays ₹1,16,000 to the supplier — the ₹1,18,000 invoice less ₹2,000 TDS — and deposits the ₹2,000 TDS with the government on the supplier's account: a total outflow of ₹1,18,000. It then reclaims the ₹18,000 GST as input tax credit, so the net cost is ₹1,00,000.
What does the customer need to do?
Deduct at the time of credit or payment, whichever is earlier. Deposit by the 7th of the following month. File the quarterly TDS return and issue Form 16A so the supplier can claim credit. Quote the supplier's PAN correctly — a wrong PAN attracts a 20% deduction rate instead of 2%.
Techvity issues GST invoices under SAC 997315 with PAN and GSTIN stated, so your accounts team has everything needed to deduct correctly on the first invoice.
This article explains general treatment and is not tax advice. Confirm the current-year threshold and your specific facts with your chartered accountant.