TDS ON RENT

This query is : Resolved

GIRISH KUMAR DUNDLODIA (Querist)
Follow

13 December 2008 A COMPANY IS PAYING MONTHLY RENT OF RS3,75,000 TO AN INDIVIDUAL AND IS ALSO DEDUCTING MONTHLY POWER CHARGES AT THE TIME OF PAYMENT.WHAT I WANT TO KNOW IS WHETHER TDS U/S194I HAS TO BE MADE ON RS.3,75,000 OR AFTER DEDUCTING POWER CHARGES???

Mcgupta

Mcgupta (Expert)
Follow

13 December 2008 Liability of tds arises at the time of credit or payment whichever is earlier. What actual amount is being paid to party is irrelevent. So, you have to deduct tds on 3.75 lacs.

Guest

Guest (Expert)

13 December 2008 you are deducting power charges it means you are paying power charges which actually required to be borne by owner of the property. and you are paying it on his behalf.

Further your rent is fixed for Rs. 3.75 L which shall be considered and not the amount you are paying in its respect after deducting the claim for the exp you have incurred on his behalf.

So tds liability is on 3.75 L.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
Follow

13 December 2008 Tds should be deducted on rs. 3.75 Lakhs.

Jairam

Jairam (Expert)
Follow

13 December 2008 Deduct on Rent excluding service tax.

K V Subba Rao

K V Subba Rao (Expert)
Follow

15 December 2008 This point ought to have been taken care of while drafing Rental Agreement. Once you pay Rs 3.75 lacs and treat it as Rent, you have no option except to affect TDS on full amount of Rs 3.75 lacs.

Practically, TDS is not a big problem because this amount can be deducted by Landlord from his Tax liability.

Bigger problem is for Service Tax which becomes payable on Power expenditure portion also since it is included in Rs 3.75 lacs rent as per your records.