Tds on bldg maint chgs paid by member to the association

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2015 Hi,

Let's assume there are 3 parties as follows -
X - Owner of office in a building
Y - Building Association where owner is having office
Z - Tenant for X occupying the office in that building

Y raised invoice on X for Annual Maintenance Charges (AMC) for the share of X.

X asked Z to pay directly this amount to Y, in which case, Z said that they will deduct TDS and will make net payment, and will issue TDS certificate in favour of Y.

Y is not ready for any deduction towards TDS, as it says that there is no direct relationship between Y and Z. Y is also saying that when member pays AMC to the Association, it is not from profit motive, and it is a mutual concern, hence, in such cases, TDS is not applicable.

Question to forum -

1. Is Y right in saying that TDS is not applicable? If yes, under what section(s)?

2. Is Z right in saying that they can make payment for AMC only after deducting TDS, irrespective of whether they are paying to landlord or to the association?

3. Any other points of importance for this kind of transactions?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 July 2015 1 Y is right in saying TDS is not applicable in view of mutual concern.
2 Z is right in saying if he is making payment to association, as he is not a member hence TDS applicable.
If Z makes payment to land lord being reimbursement of expenses TDs not applicable.

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2015 Thanks Seetharaman!

However, please can you share some reference of law or sections to substantiate Y's point of view? I tried searching on internet, but couldn't get anything to support that.

Thanks again

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 July 2015 I am not able to copy the link.
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