11 February 2024
TDS not applicable. It is possible to argue that lease premium paid for leasing land and/or building for long period (say 99 years) does not result in withholding tax liability u/s 194-IA. However, care must be taken to draft the agreement between the lessor and the lessee substantiating the intention of the parties to the contract. The ownership in substance, if retained with the lessor throughout the tenure of the lease clearly indicates that what is transferred is the rights of usage of land and/or building and not the asset itself.