Tds calculation on rent

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Ravi kumar

Ravi kumar (Querist)
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13 September 2013 how to calculate TDs on rent & salary

CA Pallav Singhania

CA Pallav Singhania (Expert)
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13 September 2013 TDS to be deducted by the Employer on Employees Salary for the financial year.
The Employer make a computation of Total Income and Income tax thereon on the basis of Salary given and other information provided by the Employee.
After calculation of Tax Amount, it will be divided by 12 and deduct TDS from Salary of employee every month.

Example:
If Gross salary of A is 5,00,000/-. and A claim HRA exemption is 54,000/- PF deducted from salary is Rs. 60,000/-. A provided that He paid LIP Rs. 4,000/- and Invested Rs. 36,000/- in NSE and his other Income is 3,000/-

Calculation of Total Income & Tax:
Taxable Salary = 5,00,000 - 54,000 =4,46,000
Less: Deduction U/s 80C
For PF Contribution 60,000
For LIP Payment 4,000
For Investment NSC 36,000
Total is Rs. 1,00,000/-
Now A's Total Income is Rs. 3,46,000
Tax on above is Rs. 24,200
Add: Cess @ 3% 726
Total Tax Rs. 24,926/-
TDS per month = 24,926/12 = 2,077.17
Hence Employer deduct TDS from A's salary Rs. 2,077.17 or 2,077/- PM.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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13 September 2013 ere we shall discuss Income Tax to be deducted on payments of Rent as per Section 194-I of the Indian Income Tax Act.

Person responsible for paying any income by way of rent to a resident shall deduct income tax at source on such payment at the time of payment or credit whichever is earlier.

The liability to deduct tax at source is on any person except individual and HUF. However, individual and HUF are also covered by liability to deduct tax at source if their books are required to be audited under section 44AB during the immediately preceding financial year.

[The turnover from business/profession exceeds the limits specified u/s 44AB during the financial year immediately preceding the financial year in which the rent is paid or credited].

No income tax is required to be deducted at source if the aggregate amount of rent credited/paid or likely to be credited/paid to a single payee during the financial year does not exceed Rs.1,80,000/- from 1.7.2010 (previously it was Rs.1,20,000).

Rates at which tax is required to be deducted

1.Use of Machinery, Plant or Equipment: 2%

2.Use of any land or building including factory building or land appurtenant to a building including factory building or furniture or fittings :10%

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