Tds on rent

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This query is : Resolved

BHAKTI BHUSHAN MUTHA (Querist)

02 October 2013 I'v entered ibto lease agreement with 3 owners paying rent to 3 of the m in 4 installment... which in aggregate exceeds Rs. 3 L p.a. should i v to deduct tds on it assuning rent. Amt exceeds 1.80.

Ajay Mishra

Ajay Mishra (Expert)

02 October 2013 Go to the following link:

https://www.caclubindia.com/experts/tds-on-rent-1462979.asp

Ajay Mishra

Ajay Mishra (Expert)

02 October 2013
Persons liable to deduct tax at source:

Any person not being an individual or a H.U.F. who is responsible for paying to a resident any income by way of rent is liable to deduct tax at source as and when aggregate of the amounts of such income
credited or paid or likely to be credited or paid during the financial year exceeds Rs. 1,80,000/-. Individual
or H.U.F.s who were subject to tax audit under Section 44AB during the financial year immediately preceding the financial year in which such rent is paid or credited are also liable to deduct tax at source.

Time of deduction and Rate:

At the time of credit of such income to the account of the payee or at the time of payment thereof in cash/ cheque etc. whichever is earlier. Tax is to be deducted at source at the rates mentioned hereunder (w.e.f. 1.10.2009):
 (i) For renting of land, building, furniture & fittings :The rate of deduction is 10%
 (ii) For hiring of machinery, plant or equipments :The rate of deduction is 2%
No cess to be added.Flat rate of 10% /2 % is to be deducted.

Ajay Mishra

Ajay Mishra (Expert)

02 October 2013
Meaning of the word ‘Rent’:

‘Rent’ means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any
(a) land; or
(b) building (including factory building); or
(c) Land appurtenant to a building (including factory building); or
(d) Machinery; or
(e) Plant; or
(f) Equipment; or
(g) Furniture; or
(h) Fittings
Whether or not any of or all of the above are owned by the payee Explanation (i)to Section 194I. Subletting is also covered.
In case the landlord collects security or advance payment at the time of letting out a building to a tenant on the condition that the deposit will be refunded at the time of vacating the building, such a receipt is not in the nature of income and therefore no tax is to be deducted at source u/s 194I.

However advance rent (not in the nature of refundable) paid is subject to tax deduction.Moreover where any such rent is credited to ‘Suspense Account’ or to any other account shall also be liable to deduct tax at source.

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