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Tds on rent section 194-i

31 December 2016

I run a plastic Mould & Die manufacturing unit on a rented portion of a building. I pay 35,000/month into the company account of the landlord (He owns a business at a different location). I dont run turnovers above Rs 50Lacs or file IT under sec 44AB. Do I have to deduct and pay TDS on the rent I pay? If so at what rate, 2% for plant & machinery or 10% for building? Which category does 10.3% deduction come under?

Note: I found on some websites that a company who pays the rent is exempted to deduct TDS on rent under sec 194-I, if he does not have a turnover in the range of 40 lacs to 1 cr and file his IT under sec 44AB.

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8 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 31 December 2016

Whether your organization is corporate or firm or proprietorship?

Satheesh Gopinath (12 Points)
Replied 31 December 2016

Thanks for the reply Sir. My company is sole propreitorship.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 31 December 2016

If your annual turn over is just 50 lakhs, and when not liable to audit u/s. 44AB for preceeding year; then you are not required to deduct TDS u/s. 194I.

Satheesh Gopinath (12 Points)
Replied 31 December 2016

Sir thank you so much for the help.

In fact I used to deduct TDS on the rent until now @ 10.3% and pay it since 2005 mine or the landlord's accounts people were not aware of the exemption, this doubt about excemption arised just few days back when my landlord asked to pay back the deducted amount (without paying TDS) as I came late on the TDS payment.

What happens from now on if I dont deduct TDS and pay the rent in full?

What happens to the TDS paid from 2005 until now?

I have only been doing turnovers below 50l since starting my company.

Does my rented propert come under plant and machinery or building? I saw TDS under sec 194-I at 2% for plant and machinery and 10% for building.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 31 December 2016

First of all, whatever TDS had been deducted till date, when paid to treasury, you can download form 16A and issue it to deductee, based on which he can get credits of the said amount.

Continue the procedure till march 2017 payment; and from next year re-evaluate the liability.