Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

TDS to be deducted or not

Amit Gupta (Loosening Myself) (1508 Points)

01 September 2010

Hii

In case, farmer has provided land to the company for rent for agriculture purpose..is the co liable to deduct tds without being possible to know if the farmer has non agriculture income also..and at what rate if he has no PAN card also??

Reply
Follow
Share

10 Replies

Manjunatha G D (Audit Assistant) (21 Points)
Replied 02 September 2010

Any Corporate or Non Corporate if agriculture purpose TDS is fully exempt as per income Tax Act.

venkatraman shrinivas (Tax consultant/Tax Advocate In Practice.) (313 Points)
Replied 02 September 2010

Mr.Amit.Pl.note.

The land let out is purely agricultural land and which operations are reportedly carried on by the company to which it is let. Section 2(1A) clearly defines what is agricultural income and in sub secrion (a) it clearly states "any rent or revenue from land which is situated in India and is used for agricultural purposes" From the information furnished (though looking hypothetical) it is deduced that the company also uses the land for agricultural purposes. Hence the rent received by the farmer from the company is snot liable to tax.

Now coming to the obligation to deduct tax at sourace, section 194I enjoins an obligation on the part of the payer of rent (by what ever name it is called) to deduct tax @ 10% if the total rent paid exceeds Rs.1,80,000. This section does not say that the rent which is exempted in the hands of the receiver is outside the scope of TDFS under section 194I. The company is, therefore, obliged to deduct tax, if the rent paid exceeds Rs.1.80 lakhs. However, the farmer can approach the jurisdictional TDS Officer and obtain a Nil deduction certificate and furnishes it to the company based on which alone, the company can refrain from not deducting tax on the rent, if it exceeds Rs.1.8lakhs.

1 Like

vpr99 (Manager-Accounts&Finance) (68 Points)
Replied 02 September 2010

As per my opinion, it is icnome frm agr.land to farmer, as per it rules is agr.income but to the company it is expenditure in the nature of rent , so tds to be deducted if it exceeds max.limit under 194 I