Tds

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Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2012 Hi experts, please give advice on following.

My company is engaged in construction business hence we hire some machinery on rent. In some cases we make advance payment of rent in cash (below Rs. 20000/-). Now I wont to know whether we need to make TDS on cash payment made. If yes, then how?

Thanks in advance.

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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15 October 2012 tds is deducted @ 2% on rent of machineries u/s 194I if the amount exceeds 180000 p.a and TDS certificate has to be issued to the supplier

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Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2012 thanks for reply, i know TDS provisions. But my question is different, i am making advance payment in cash so what will be TDS implications on advance paid in cash.

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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15 October 2012 Circular: No. 715, dated 8-8-1995.

Treatment of Non -refundable advance & other

Where advance of rent was paid before 1-6-1994, there is no requirement for deduction of tax at source.
In cases where the tenant makes a non-refundable deposit, tax would have to be deducted at source as such deposit represents the consideration for the use of the land or the building, etc. and therefore partakes the nature of rent as defined in section 194-I. If however the deposit is refundable, no tax would be deductible at source. If the deposit carries interest, the tax to be deducted on the amount of interest will be governed by section 194A.
Warehousing charges will be subject to deduction of tax under section 194-I.
If the municipal taxes, ground rent, etc., are borne by the tenant, no tax will be deducted on such sum.
The definition of the term ‘any land’ or ‘any building’ would include a part or a portion of such land or building, and hence section 194-I would apply to rent paid for the use of only a part or a portion of any land or building.

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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15 October 2012 hope this might help you