02 May 2013
Dear Freinds What will be amount for TDS in case of rent , if it includes electricity charges (Fixed per month)also and agreement is a composite agreement for rent & electricity both. Whether TDS is Deductible on payment of electricity amount fixed per month sepratly other than rent under a seprate agreement , if yes then under which section.
Following is the definition of rent as per explanation (i) to section 194 I
[(i) “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,—
(a) land; or
(b) building (including factory building); or
(c) land appurtenant to a building (including factory building); or
(d) machinery; or
(e) plant; or
(f) equipment; or
(g) furniture; or
(h) fittings,
whether or not any or all of the above are owned by the payee;]
Looking to the above definition it is cleared that reimbursed electricity expenses could not be considered as rent or part of a rent.
Therefore, reimbursement of actual electricity charges along with rent in accordance with the agreement cannot be considered as rent. There fore no TDS is deductible against electricity charges portion.
But your case is different, as per the agreement a fixed sum was to be paid as reimbursement of electricity charges on regular basis. Point to be considered actual electricity charges was not being reimbursed, instead a fixed amount was being paid on regular basis as reiumbursement of electricity charges along with rent.
In my opinion, TDS is to be applicable at the prescribed rate U/S 194I on the entire amount (rental + fixed electricity charges)
Rate of TDS U/S 194 I (a) two per cent for the use of any machinery or plant or equipment; and (b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings:]
Note: TDS would be applicabe, in case where payer (tenant) is other than HUF and individual, if rental amount exceeding Rs. 1,80,000 p.annum. In your case rent including fixed electricity charges.
TDS under this section would also be applicable to individual and HUF, when they were carrying carrying business or profession and their books of accounts were required to be audited under the Income Tax Act, 1961.
CAclubindia
