Tds on rent

This query is : Resolved

Basavaraj I Hebbal (Querist)
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18 April 2017 I have a case study for discussion. ABC company has taken premises on rent from XYZ landlord. ABC company initially was using the second floor only, the rent was Rs.14000 pm only. Now ABC company expanding its business and took the part of the third floor for Rs.7000 pm rent. Landlord requested to have lease agreement with his wife name for third floor portion.

Please help, how ABC company should proceed?

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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19 April 2017 Yes, ABC Company can accept request of landlord to have lease agreement with his wife name.

Actually what happened that Landlord don't want that TDS should be deducted from Rent which he is receiving.

As per Section 194-I of the income tax Act, if rent paid/payable to a person is more than 180000( in agreegate) in a year then TDS is to deducted @ 10% in case of building.

Lets understand this with your case

- Currently you are paying Rent of Rs 14000 P.m i.e Rs. 168000 in a year hence no TDS is to be deducted because same is less than limit of rs. 180000.

- If agreement for third floor which has additional rent of Rs. 7000 is also entered in the name of landlord then his total income from rent become 21000 p.m i.e 2,52,000 which is more than exemption limit of 1,80,000 and hence TDS of Rs. 25,200 is also required to be deducted from the same.

- But if agreement is entered in the name of landlord's wife then there is different situation she is receiving rent of Rs. 7000 p.m i.e 84,000 and landlord is receiving rent of 1,68,000, hence no TDS.

Basavaraj I Hebbal

Basavaraj I Hebbal (Querist)
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19 April 2017 Thanks CA Shubhanshu Jain,

Can the ABC company have a lease agreement with his wife name though she is not the owner of the property?

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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19 April 2017 Yes, There will be no problem because ultimately landlord is the owner and wants to save tax in this way

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