tds deducted on rent

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Sneha (Querist)
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20 December 2008 We have made an agreement to pay the rent of Rs.9500/- and maintenance charges of Rs.4500/-.

Is TDS applicable, if yes on which amt?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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20 December 2008 50% of rent is maintenance charges in the given case. Collusion between landlord and tenant. However TDS applicability depends on explanation (i) of section 194I which says " rent means any payment,by whatever name called,under any lease, tenancy or any other agreement......". So also answer to question no 4 in circular 715 dt 8/8/1995 says The incidence of TDS does not depend upon the nomenclature,but on the content of the agreement as mentioned in the above explanation. To conclude,from the given data, if rent deed is examined ,unless you substantiate maintenance charges,rent will be considered as Rs14000/-and tax will have to be deducted on that amount.

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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21 December 2008 Its simple. By making two saperate contracts ( One for Maintenance and another for Rent), you can save TDS on rent as it is below Rs.120000 per annum. But you can't save TDS liability on maintenance exp, as it will be covered u/s 194C, and your gross amount for the year will cross Rs. 50000/- in an year.

CA Parvin Ahuja

CA Parvin Ahuja (Expert)
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21 December 2008 You will have to deduct tax on maitanance charges @2% plus 3% EC on TDS under section 194C of The Income Tax Act.No tax will be deducted on rent since the amount payable per annum is less than Rs.1,20,000/-.

K V Subba Rao

K V Subba Rao (Expert)
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21 December 2008 There is scope for ITO to view it in a way unfavourable to you as opined by Mr Warrier. There is a possibility of ITO treating entire sum as for Rent purpose only.

We shold also remember that TDS rates are different for 194-C and 194-I

You may examine the scope of paying Maintenance Charges to a different person (as desired by Landlord)under a seperate Contract.

So long as you pay both Rent and Maintenacne Charges to one individual, whethter under one composite agreement or seperate agreements, democles sword keeps on hanging

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