Rent threshold

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This discussion clarifies the TDS (Tax Deducted at Source) rules for rent payments in India, particularly concerning the threshold of INR 50,000 per month. The key point is that the threshold applies to the monthly rent, not the total annual payment. If rent is paid in advance, the TDS liability is determined by the year in which the payment is made, even if it covers periods from previous financial years. The discussion highlights that exceeding the monthly limit triggers the TDS requirement, regardless of how many months are paid in a single financial year.

PURUSOTTAM PANDA

PURUSOTTAM PANDA (Querist)
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15 March 2025 From 01.04.2025:

1. Building Rent per month is INR 40000. If I pay 16 months rent, i.e., INR 640000 during the FY 2025-26, I don't need to deduct tax.

2. Building Rent per month is INR 55000. If I pay 1 month rent, i.e., INR 55000 during the FY 2025-26, I need to deduct tax.

Am I wrong?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 March 2025 A. The rent is for 12 months in an year, The TDS for remaining 4 months' rent need to be deducted in the relevant year.
2. Correct.

PURUSOTTAM PANDA

PURUSOTTAM PANDA (Querist)
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23 March 2025 Sir,

If this is so, then the first proviso to Section 194I should have been amended as "... does not exceed six hundred thousand rupees" instead of "... does not exceed fifty thousand rupees for a month or part of a month".

This is my confusion. Please guide.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 March 2025 The confusion is you are exceeding calendar months to 16 in an year. The act is for particular assessment year, not for the clubbing of assessment years.

PURUSOTTAM PANDA

PURUSOTTAM PANDA (Querist)
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23 March 2025 Sir,

My intention is not to make 16 months calander year. The logic is:

We are following cash system of accounting and 4 months rent is due to be paid for the FY 2023-24 along with full year rent is due to be paid for the FY 2024-25. We shall pay all the dues in April 2025.

Do we need to deduct tax?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 March 2025 The supply is of earlier year, due is paid in next year, but liability to deduct TDS arises in preceding year.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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04 October 2025 Good luck...

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