Tds on rent fy 2012-13

This query is : Resolved 

(Querist) 04 April 2012

A company pays rent amounting to 1 Lac per month. What is the rate of TDS applicable ? The company also pays water charges, mainenance charges and generator usage charges to the lessor for an amount of Rs 5,000pm. Whether TDS applicable to these charges.if so at what rate.

CMA. CS. Sanjay Gupta (Expert)
04 April 2012

Yes TDS will also be applicable to these charges u/s 194I. Rate of TDS 10% u/s 194I.

shibu (Querist) 04 April 2012

The lessor give bills for rent and charges seperately

CMA. CS. Sanjay Gupta (Expert)
04 April 2012

In my view TDS needs to be deducted on both u/s 194I. Some companies deduct TDS u/s 194C on Charges, which is not advisable. Section says any payment by whatever name called under any lease, sub-lease, tenancy agreement.

Some parties just break up the rent in these different components to avoid TDS deduction. So it is advisable to deduct TDS u/s 194I.

But if there is no mention of these charges in rent agreement then TDS can be deducted u/s 194C on charges. In section 194C rate of TDS will be 1% for individual and HUF and 2% for others.

shibu (Querist) 04 April 2012

Currently the company deduct 10% on rent. The lessor charges diesel charges for using generator, maintenance charges, and water charges. The lessor claims that he charge only the actual cost for diesel. For eg, split per month is:

Generator usage charges :Rs 2400
Montly Maintenance charges : Rs 1500
Water charges : Rs 1100

So now is it required to deduct 10% ?

CMA. CS. Sanjay Gupta (Expert)
04 April 2012

Was there any mention regarding this in the rent agreement? If yes Then deduct TDS u/s 194I otherwise deduct TDS u/s 194C.

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