Rent collector

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2013 A propreitorship acts as mediator for rent collection which collects rent from parties in a building and gives it to landlord after TDS. Whose name should the single parties deduct tax and does service tax registration apply to the mediator? TDS made by the mediator.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 September 2013 Since the individual parties have rent agreement with the landlord, they should deduct tax against his/her/its PAN.

If the commission received exceeds 9 lakhs, The proprietor shall have to register for Service tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

21 September 2013 There is no commission involved. Rent collector has agreement with the landlord and they are paying rent after making TDS.
Now when collection is made from individual parties including service tax how should accounts be maintained?
Want to know how accounts should be maintained of the propreitorship and rules thereof.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 September 2013 1. what is the relation between the individual parties and landlord?

2. What is the remuneration received by the rent collector?

Querist : Anonymous

Querist : Anonymous (Querist)

21 September 2013 1.Individual parties pay rent and service tax to mediator. Mediator pays it to landlord after deducting tax. no remuneration for mediator i.e, propreitorship

Problems:
Individual parties has deducted tax in their accounts but no payment has been made yet, whose name should they deduct tax? No relation with landlord

The mediator hasnt yet paid the tax to the government.

Accounts of the mediator has to be prepared. Is service tax registeration needed? How should entries be reflected in accounts?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 September 2013 well you have adopted a very inefficient tax structure.

The individuals pay service tax to mediator. If there is no relation between individual parties and the landlord, then the mediator should have registered for service tax and paid the service tax received to the govt.

the mediator should pay to landlord : rent+ service tax - TDS.

check whether input credit is available or not.

In the books the entries shall be at the time of receipt of rent as income. pass normal entries for service tax.

at the time of payment of rent to the landlord, make entries as expense.

one question still remains, what did the mediator earn out of all this? If nothing, then what purpose do he serve?

Querist : Anonymous

Querist : Anonymous (Querist)

21 September 2013 My personal opinion is the same. There is no need of such a propreitorship. The mediator earns only a loss from uncollected rent. Will check into it as the accounts is not yet formed. Rent collection has been made only for two three months. If you can please suggest an efficient way of maintaining this accounts.

Thankyou

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 September 2013 Let the Landlord take service tax registration. Let all the rent be collected in his name and let the TDS be deducted against his PAN.

let the proprietor earn a commission on the basis of rent actually collected by him/her. The commission should be paid by the landlord. If the commission is exceeding Rs 9 lakh, the proprietor register for service tax; if it exceeds Rs 10 lakhs, service tax is to be deducted.

So the books of the proprietor would include only the commission received, any expense incurred to earn the commission and taxes.

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