TDS on Rent of Co-Ownership

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Ranganath AAGJ (Querist)
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23 May 2008 dear sir.. i got one doubt..
in case of co-onership of factory which has been let for factory operations for Rs 9000 per month to each owner.
so total rent for the year Rs 1,08,000/- per owner which is less than 120000/-p.a in this case TDS applicable..

Shekar

Shekar (Expert)
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23 May 2008 Hi..

As per the Law, tax shall be deducted at source from the payment of rent, where such payment to the payee exceeds or likely to exceed Rs.1,20,000 during the year. In case there are number of payees, each having definite and ascertainable share in the said property, the limit of Rs.1,20,000 per annum shall apply to each of the co-owner individually. In such cases, the individual payees, being the co-owners of the property, shall offer rental income independently under the head `Income from House Property'. Therefore, in the given situation you are not responsible to deduct tax at source on rental payment. It needs mention and also a word of caution that non-deduction of tax as per law would invite punishments in the form of levy of interest and penalty for the payer of rent (i.e. tenant). Therefore, it is advised not to enter into colourable or sham agreements to avoid provisions of deduction of tax at source.

R.V.RAO

R.V.RAO (Expert)
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23 May 2008 IF THE SHARE OF EACH PARTNER IS DISTINCTLY STATED IN THE AGREEMENT OF LEASE , THERE IS NO TDS FOR EITHER OF THE COOWNERS / PARTNERS.
THIS IS BECAUSE EACH COOWNER IS GOING TO CLAIM INCOME IN HIS RETURN OF INCOME AS PER THE LEASE AGREEMENT WHICH STANDS TO BE VERIFIED BY AN ASSESSING OFFICER
FOR SAKE OF CLARITY AND BENEFIT OF DOUBT TO THE REVENUE.
R.V.RAO

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