TDS on Rent prepaid for a year
This query is : Resolved
Ankeet Vora
(Querist)
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
CA.Varun Ranjan
(Expert)
28 May 2009
if he is paying advance for , no tds to be deducted. limit shall be count p.a.120000 on accrual basis.
Ankeet Vora
(Querist)
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?
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