Tds deduction for guest house rent

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 December 2011 Dear Expert,

We have a partnership firm incorporated in MP. The partnership firm is basically run by the family where my father, my mother and I are the three partners and the nature of the business is to provide technical consultancy to clients.

We are currently servince a client in Gujarat. Our partnership firm was actually setup on the requirement of the client as they could not give regular employment to my father because of some HR issues, but were rather willing to hire him on a retainer/consultant basis. The agreed compensation is around 15LPA and the client is deducting 10% TDS while making payment.

We have rented an apartment in Gujarat, just to be able to serve this client. The rent of the apartment if 25000 per month.

We have the following querries

1. Can we show the entire rent as expenses of the partnership firm? Our own house is in MP and this apartment is only serving as our temporary residence. One can also call it a company guest house.

2. The the amount we show as the rent of the partnership firm's guest house, do we have to deduct TDS for the rent paid? Our landlord is an individual has said that he wants net 25000/month in-hand and he is not interested in any TDS receipts. In this scenario, if we pay the TDS, we have to show the rent as Rs 27,777 per month and the extra 2,777 per month will additional expense. We are better off not paying the TDS if it is not mandated by law.

3. If paying the TDS is mandatory for declaring the apartment as company guest house, what is the TDS rate applicable. Also, are we late in doing so? As we have been living here for the last 6 months and havent paid any amount as TDS till now.

4. The lease agreement for the apartment is signed between the partner i.e. my father and the owner. However, the rent payments are happening from the partnership firm's accounts to the owner. Do we need to get the rent agreement modified?

I would be really thankful if you could answer these queries.

Regards,
Sumit

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2012 Hello,

Can you please responsd to the above query?

-Sumit

Querist : Anonymous

Querist : Anonymous (Querist)

12 March 2012 Any responses will be of real help as the financial year is coming to a close. Thanks n regards,
sumit