TDS on Rent prepaid for a year
This query is : Resolved
28 May 2009
My client has paid rent of Rs 200000/- in advance for 2 years to a person amouting to Rs 100000/-p.a
{Rs 100000/-(08-09) + Rs 100000/-(09-10)}
1.Should he deduct TDS on this rent paid as it does not amount to Rs 120000/- p.a
2.But will he be liable to TDS on payment basis as it definetly crosses Rs 120000/- p.a
{Rs 100000/-(08-09) + Rs 100000/-(09-10)}
1.Should he deduct TDS on this rent paid as it does not amount to Rs 120000/- p.a
2.But will he be liable to TDS on payment basis as it definetly crosses Rs 120000/- p.a
28 May 2009
if he is paying advance for , no tds to be deducted. limit shall be count p.a.120000 on accrual basis.
28 May 2009
My client has paid rent of Rs 200000/- in advance for 2 years to a person amouting to Rs 100000/-p.a
{Rs 100000/-(08-09) + Rs 100000/-(09-10)}
1.Should he deduct TDS on this rent paid as it does not amount to Rs 120000/- p.a
2.But will he be liable to TDS on payment basis as it definetly crosses Rs 120000/-
{Rs 100000/-(08-09) + Rs 100000/-(09-10)}
1.Should he deduct TDS on this rent paid as it does not amount to Rs 120000/- p.a
2.But will he be liable to TDS on payment basis as it definetly crosses Rs 120000/-
27 July 2025
Here’s a clear explanation regarding **TDS on prepaid rent for a year or more**:
---
### Situation Recap:
* Rent paid in advance: Rs 2,00,000 for 2 years
* Year-wise breakup: Rs 1,00,000 per year
* Threshold for TDS under section 194-I: Rs 1,80,000 per year (currently Rs 1,80,000, but as per your note Rs 1,20,000 might be older limit)
---
### Key Points:
1. **TDS threshold is considered on a *per annum* basis on the *accrual* of rent, not on the *payment* basis.**
Meaning, even if rent is paid in advance, TDS applicability is based on the rent accrued during the financial year.
2. In your case, Rs 1,00,000 is the rent accrued for each year, which is **below the TDS threshold limit (Rs 1,20,000 or Rs 1,80,000 depending on the year).**
3. Hence, **no TDS is required to be deducted for each year separately, even if total payment crosses Rs 1,20,000 or Rs 1,80,000.**
---
### Summary:
| Rent accrued in FY | TDS Deduction Required? |
| -------------------------------- | ------------------------------ |
| Rs 1,00,000 (FY 08-09) | No (Below threshold) |
| Rs 1,00,000 (FY 09-10) | No (Below threshold) |
| Total paid Rs 2,00,000 (Advance) | Not relevant for TDS threshold |
---
### Conclusion:
* TDS is **not applicable** if rent accrued in each financial year is below the threshold, even if rent paid in advance exceeds the threshold.
* TDS threshold applies on accrual basis, not payment basis.
---
If you want, I can help draft a formal note or provide references from the Income Tax Act. Would you like that?
---
### Situation Recap:
* Rent paid in advance: Rs 2,00,000 for 2 years
* Year-wise breakup: Rs 1,00,000 per year
* Threshold for TDS under section 194-I: Rs 1,80,000 per year (currently Rs 1,80,000, but as per your note Rs 1,20,000 might be older limit)
---
### Key Points:
1. **TDS threshold is considered on a *per annum* basis on the *accrual* of rent, not on the *payment* basis.**
Meaning, even if rent is paid in advance, TDS applicability is based on the rent accrued during the financial year.
2. In your case, Rs 1,00,000 is the rent accrued for each year, which is **below the TDS threshold limit (Rs 1,20,000 or Rs 1,80,000 depending on the year).**
3. Hence, **no TDS is required to be deducted for each year separately, even if total payment crosses Rs 1,20,000 or Rs 1,80,000.**
---
### Summary:
| Rent accrued in FY | TDS Deduction Required? |
| -------------------------------- | ------------------------------ |
| Rs 1,00,000 (FY 08-09) | No (Below threshold) |
| Rs 1,00,000 (FY 09-10) | No (Below threshold) |
| Total paid Rs 2,00,000 (Advance) | Not relevant for TDS threshold |
---
### Conclusion:
* TDS is **not applicable** if rent accrued in each financial year is below the threshold, even if rent paid in advance exceeds the threshold.
* TDS threshold applies on accrual basis, not payment basis.
---
If you want, I can help draft a formal note or provide references from the Income Tax Act. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- EXEMPTION UNDER SECTION 54 FOR UNDER CONSTRUCTION FLAT
- ITR-3 ignores Section 211 (1) (b) for Professionals u/s 44ADA
- Upload Level Validation Error
- ERROR IN ITR3
- Salary u/s 194C
- Deduction for HUF
- Nill TDS Return FY 2025-26
- How to add NRE account to income tax profile?
- Form 10E requirement for Leave encashment and Gratuity received at retirement
- AY2025-26- Bug in ITR2 Online Filing - TDS Section related to Property Sale
- Income tax 115JC
- Sale of Building - profit
- Sale of foreign shares in Indian Rupees - FEMA rules
- Registered Partnership Bank Account
- Seprate Financial statement
- Calculate Tax Liability of Sharmila
- Document to add trade name
- GST Partners addition
- Non-disclosure of Foreign Shares & Dividend in Past ITRs – How to Rectify & Report Now?
- ICWAI-Final best coaching center for online by English
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
