Ans:
Because the deposit constitutes considering using the land on the building, tax has to be deducted at the source (TDS), where the renter submits a non-refundable deposit. As a result, it falls under the definition of rent as specified in Clause 194-I. If the deposit is refundable, however, no tax will be deducted at the source. It is also stated that if the deposit bears interest, the tax levied on the interest shall be governed by Section 194A of the Income Tax Assessment act.