TDS

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This query is : Resolved

CA Suresh Paghdar (Querist)

01 April 2009 Mr A acquire an office building on Rent.As per rent agreement Mr.A has to pay Rs.45000/-pm rent and Property Tax Rs 16,00,000/p.a.
Now the querry is whether Mr. A is liable to deduct tax only on Rs 45000/-pm or property tax will also be considered as rent in kind and has to deduct tax on that amount also ?

Neeraj Kumar Goyal

Neeraj Kumar Goyal (Expert)

01 April 2009 Yes, TDS is applicable on both.

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)

01 April 2009 may i know what exactly is property tax whether its paid to govt or...?
pls pm me

K V Subba Rao

K V Subba Rao (Expert)

01 April 2009 Total consideration received directly and indirectly by Landlord works out to Rs 21.40 lacs {(Rent Rs 45000 x 12 Months)+Municipal Tax Rs 1600000}

As against annual rent of Rs 21.40 lacs, is such huge sum of Rs 16.00 lacs (about 75%) payable towards Property Tax alone ?

Coming to TDS aspect, TDS has to be affected on Rs 21.40 lacs

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)

01 April 2009 As per Circular 718 dt 22-08-1995 no tax will be deducted on Municipal Taxes if it is borne by the tenant.

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)

02 April 2009 circular 718
Rent has been defined, to mean payment under any lease, tenancy, agreement,etc., for use of any land or building. Thus if muncipal tax, gorund rent, etc., are borne by tenant no tax will be deducted on such sum

so applying this rule tds wont be deducted on property tax also which is borne by tenant as the same is to be paid to government and is not the income of the owner

K V Subba Rao

K V Subba Rao (Expert)

02 April 2009 After goint thro replies of Sri Hussain and Ms Gandhi, I agree with their views

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