TDS Deduction
This query is : Resolved
04 March 2009
I am running a proprietor concern and my business is providing Staff House to the corporates. i would like to know in which category i will be coming for TDS deduction whether u/s 194C as a contractor or u/s 194 i and in the u/s 194 i there is "Payment of Rent for Building & Furniture whose gross receipts are less than 40 Lakhs in a financial year are not required to deduct TDS” do a proprietor concern comes under the category of Individual because my last year transaction hasn't crossed even 10 Lakhs.
04 March 2009
Yes if your transactions are below 40LKHS the limit for TAX Audit u/s 44AB & your's is a proprietory concern you may not deduct TDS
I hope Shiyaz YOu are aware that you will fall under Service Tax, So pls do the needful for that
Chandrakant Ambani
Bombay
9819408963
9821240674
I hope Shiyaz YOu are aware that you will fall under Service Tax, So pls do the needful for that
Chandrakant Ambani
Bombay
9819408963
9821240674
Message likes :
1 times
05 March 2009
I am running a proprietor concern and my business is providing Staff House to the corporates. i would like to know in which category i will be coming for TDS deduction whether u/s 194C as a contractor or u/s 194 i and in the u/s 194 i there is "Payment of Rent for Building & Furniture whose gross receipts are less than 40 Lakhs in a financial year are not required to deduct TDS” do a proprietor concern comes under the category of Individual because my last year transaction hasn't crossed even 10 Lakhs Please explain me in detail as i have to submit your reply to the company along with the section details to prove we are right.
05 March 2009
tell your turnover for 31.3.2008, 31.3.2009 than this could be replied
Message likes :
1 times
27 July 2025
Here’s a detailed explanation you can submit to the company regarding **TDS applicability on your proprietor concern providing staff house**:
---
### Query Recap:
* Proprietor concern running business of providing staff house to corporates.
* Transactions (receipts) are below Rs. 10 Lakhs in last FY.
* Need clarity whether TDS is deductible under **Section 194C (Contractor)** or **Section 194I (Rent)**.
* Also, whether the 40 Lakhs threshold exemption applies to proprietor (individual).
---
### Relevant TDS Sections & Applicability:
**1. Section 194C — Payment to Contractor:**
* Applies when payment is made to contractors for carrying out any work (including supply of labor).
* "Work" includes supply of labor for carrying out any work (excluding supply of materials).
* Since your business is providing **staff house services**, it might be viewed as a **service contract**, but not exactly "work" in the sense of physical contract work or labor supply for construction etc.
* Usually, TDS under 194C applies to contracts involving physical work or labor.
**2. Section 194I — Rent:**
* Applies to payment of rent for **land, building, furniture or fittings**.
* If your transaction is rental income for providing staff house accommodation (i.e., renting buildings or premises), Section 194I is applicable.
* **Threshold exemption:** TDS is required only if the annual rent exceeds Rs. 2,40,000 (or 2.5 Lakhs as per some updates).
* For rent payments, the threshold limit is applicable to the payer, not the payee. Meaning, the company paying you must deduct TDS only if the rent paid to you crosses the threshold limit.
**3. Threshold of Rs. 40 Lakhs in Section 194I:**
* This Rs. 40 Lakhs limit applies only for **professional or technical services under section 44AB (audit threshold)** and NOT as exemption for TDS deduction.
* For TDS, **Section 194I** has its own thresholds (like Rs. 2,40,000 annually for rent).
* Also, the term "Individual" here means the payer’s status (if payer is individual or HUF, TDS deduction threshold is Rs. 2,40,000).
* Proprietor concern is a **business entity**, not an individual. But your client/company deducts TDS as per payee category and amount.
---
### Summary for Your Case:
| Criteria | Details |
| ------------------------------- | --------------------------------------------------------- |
| Nature of Income | Rent for Staff House (Building) |
| Applicable Section | Section 194I (Rent) |
| Threshold for TDS deduction | Rent paid > Rs. 2,40,000 per annum (Payer-wise) |
| Proprietor Concern Category | Treated as Business/Individual for TDS purposes |
| If your receipts Our business is a **proprietor concern** providing staff housing (rent of building) services. As per Section 194I of the Income Tax Act, TDS on rent is deductible only if the **rent paid exceeds Rs. 2,40,000 per annum**. Our receipts are less than Rs. 10 Lakhs and below the threshold limit for TDS deduction by the payer.
> Hence, the company is **not required to deduct TDS** under Section 194I.
> Since our business does not involve any contract work or labor supply, Section 194C is **not applicable**.
> Therefore, we confirm that no TDS deduction under these sections is required on payments made to us.
---
If you want, I can help draft this as a formal letter/email too! Would you like me to prepare that?
---
### Query Recap:
* Proprietor concern running business of providing staff house to corporates.
* Transactions (receipts) are below Rs. 10 Lakhs in last FY.
* Need clarity whether TDS is deductible under **Section 194C (Contractor)** or **Section 194I (Rent)**.
* Also, whether the 40 Lakhs threshold exemption applies to proprietor (individual).
---
### Relevant TDS Sections & Applicability:
**1. Section 194C — Payment to Contractor:**
* Applies when payment is made to contractors for carrying out any work (including supply of labor).
* "Work" includes supply of labor for carrying out any work (excluding supply of materials).
* Since your business is providing **staff house services**, it might be viewed as a **service contract**, but not exactly "work" in the sense of physical contract work or labor supply for construction etc.
* Usually, TDS under 194C applies to contracts involving physical work or labor.
**2. Section 194I — Rent:**
* Applies to payment of rent for **land, building, furniture or fittings**.
* If your transaction is rental income for providing staff house accommodation (i.e., renting buildings or premises), Section 194I is applicable.
* **Threshold exemption:** TDS is required only if the annual rent exceeds Rs. 2,40,000 (or 2.5 Lakhs as per some updates).
* For rent payments, the threshold limit is applicable to the payer, not the payee. Meaning, the company paying you must deduct TDS only if the rent paid to you crosses the threshold limit.
**3. Threshold of Rs. 40 Lakhs in Section 194I:**
* This Rs. 40 Lakhs limit applies only for **professional or technical services under section 44AB (audit threshold)** and NOT as exemption for TDS deduction.
* For TDS, **Section 194I** has its own thresholds (like Rs. 2,40,000 annually for rent).
* Also, the term "Individual" here means the payer’s status (if payer is individual or HUF, TDS deduction threshold is Rs. 2,40,000).
* Proprietor concern is a **business entity**, not an individual. But your client/company deducts TDS as per payee category and amount.
---
### Summary for Your Case:
| Criteria | Details |
| ------------------------------- | --------------------------------------------------------- |
| Nature of Income | Rent for Staff House (Building) |
| Applicable Section | Section 194I (Rent) |
| Threshold for TDS deduction | Rent paid > Rs. 2,40,000 per annum (Payer-wise) |
| Proprietor Concern Category | Treated as Business/Individual for TDS purposes |
| If your receipts Our business is a **proprietor concern** providing staff housing (rent of building) services. As per Section 194I of the Income Tax Act, TDS on rent is deductible only if the **rent paid exceeds Rs. 2,40,000 per annum**. Our receipts are less than Rs. 10 Lakhs and below the threshold limit for TDS deduction by the payer.
> Hence, the company is **not required to deduct TDS** under Section 194I.
> Since our business does not involve any contract work or labor supply, Section 194C is **not applicable**.
> Therefore, we confirm that no TDS deduction under these sections is required on payments made to us.
---
If you want, I can help draft this as a formal letter/email too! Would you like me to prepare that?
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