Tds on self lease house rent
This query is : Resolved
07 February 2012
A COMPANY IS PAYING TO ITS EMPLOYEE RS. 20000 P.M. TOWARDS RENTAL FOR SELF LEASED RESIDENTIAL ACCOMMODATION AND DEDUCTING TDS @10 EVERY MONTH. HENCE, TOTAL TDS RECOVERED FOR THE YEAR IS RS. 24000. HOWEVER, THE INCOME FROM HOUSE PROPERTY IS ONLY RS. 5000. CAN THE EMPLOYER ADJUST THIS TDS AMOUNT AGAINST TAX LIABILITY ON SALARY INCOME? IF YES, PLEASE PROVIDE THE REFERENCE.
07 February 2012
Dear friend, the amount paid by company for providing free rental accomodation to its employees is perk u/s. 17 and same will be added to the salary of the employess. The TDS paid by employer on leased accomodation will also be included in your salary.
08 February 2012
Dear Deepak ji,
Excuse me, my query is different. My query is- The Company is paying lease rental to its employees after recovering TDS of 10% on the same. Can this TDS be adjusted with tax liability on Salary Income?
Excuse me, my query is different. My query is- The Company is paying lease rental to its employees after recovering TDS of 10% on the same. Can this TDS be adjusted with tax liability on Salary Income?
08 February 2012
As per your query, the same income need to be added in to employee`s house property income and need to be calculated Gross total income and taxed accordingly and deduct TDS on the same
But view of Mr. Deepak also is valid, because what ever payment made by the employer to employee under employment is treated as Salary income only. Please check these points for avoiding violating of the provisions and questionable by the A.O at the time of assessment
But view of Mr. Deepak also is valid, because what ever payment made by the employer to employee under employment is treated as Salary income only. Please check these points for avoiding violating of the provisions and questionable by the A.O at the time of assessment
09 February 2012
dear ramesh ji, my query is very clear:
my query is:
whether tds deducted on rent by the employer can be adjusted with tax liability of the employee on salary income?
my query is:
whether tds deducted on rent by the employer can be adjusted with tax liability of the employee on salary income?
09 February 2012
yes. it can be adjusted against the Total tax liability payable by the employee.
09 February 2012
any reference.
09 February 2012
Refer circular no.
CIRCULAR NO. 05/2011 dated 16.08.2011
Refer circular no.
CIRCULAR NO. 05/2011 dated 16.08.2011
09 February 2012
An employee other than salary , any other income he/she getting the same will be included in gross total income and need to allow applicable deductions and calculate total tax liability, against this total tax liability can be adjusted tax deduction against all incomes
10 February 2012
extract of above circular is as follows according to which tds can be adjusted in case of loss from house property and other income but total tax payable should not be lesser than tax on salary :
Such income should not be a loss under any such head other than the loss under the head "Income from House Property" for the same financial year. The person responsible for making payment (DDO) shall take such other income and tax deducted at source, if any, on such income and the loss, if any, under the head "Income from House Property" into account for the purpose of computing tax deductible in terms of section 192(2B) of the Income-tax Act. However, this sub-section shall not in any case have the effect of reducing the tax deductible (except where the loss under the head "Income from House Property" has been taken into account) from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account'. In other words, the DDO can take into account any loss (negative income) only under the head “income from House Property” and no other head for working out the amount of total tax to be deducted.` While taking into account the loss from House Property, the DDO shall ensure that the assessee files the declaration referred to above and encloses therewith a computation of such loss from House Property.
Such income should not be a loss under any such head other than the loss under the head "Income from House Property" for the same financial year. The person responsible for making payment (DDO) shall take such other income and tax deducted at source, if any, on such income and the loss, if any, under the head "Income from House Property" into account for the purpose of computing tax deductible in terms of section 192(2B) of the Income-tax Act. However, this sub-section shall not in any case have the effect of reducing the tax deductible (except where the loss under the head "Income from House Property" has been taken into account) from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account'. In other words, the DDO can take into account any loss (negative income) only under the head “income from House Property” and no other head for working out the amount of total tax to be deducted.` While taking into account the loss from House Property, the DDO shall ensure that the assessee files the declaration referred to above and encloses therewith a computation of such loss from House Property.
10 February 2012
what is your query on this.?
27 July 2025
Here’s a clear summary of your query on **TDS on self-leased house rent paid by employer to employee** and adjustment of TDS against tax liability:
---
### Scenario Recap
* Employer pays rent of Rs. 20,000 per month to employee for self-leased accommodation.
* Employer deducts TDS @10% on the rent paid, i.e., Rs. 24,000 for the year.
* Employee’s **income from house property** (from this rent) is only Rs. 5,000 (likely due to allowable deductions like interest, municipal taxes, etc.).
* Question: Can the employee adjust the TDS deducted on rent against their tax liability on salary income?
---
### Important Points & Explanation
1. **Rental Income is taxable under "Income from House Property"** for the employee (less deductions).
This rent received by the employee is income other than salary.
2. **Employer deducts TDS on the rent paid to employee under Section 194-IB or 194C or similar**, but this is *not* TDS on salary under section 192.
3. **Can the TDS deducted on rent be adjusted against the employee’s overall tax liability including salary income?**
* **Yes**, the TDS deducted on rental income is reflected in the employee’s Form 26AS and can be claimed as credit against the **total tax liability of the employee**.
* Tax deducted at source is a payment of tax on behalf of the employee, regardless of the head of income on which tax is deducted.
4. **Reference: CBDT Circular No. 05/2011 dated 16-08-2011** clarifies that for computing tax deduction under section 192 (salary TDS), losses from "Income from House Property" can be taken into account. But more importantly:
* The total TDS deducted (including on house property income) is available as credit to the employee when filing income tax returns.
* This TDS can reduce the tax payable on salary or any other income head.
5. **So effectively, the TDS deducted on rental income can be adjusted against tax liability on salary income when the employee files their income tax return.**
---
### Summary:
| Question | Answer |
| ------------------------------------------------ | --------------------------------------------------------------------------------------------------------------- |
| Is rent paid by employer to employee taxable? | Yes, under Income from House Property. |
| Can employer deduct TDS on this rent? | Yes, under relevant TDS sections (e.g., 194-IB or 194C). |
| Can employee adjust this TDS against salary tax? | Yes, the TDS deducted on rent can be adjusted against total tax liability including salary tax when filing ITR. |
| Reference | CBDT Circular No. 05/2011 dated 16-08-2011 and Income Tax Act provisions. |
---
### Practical implication:
* Employer deducts TDS @10% on rent paid.
* Employee includes rent income in "House Property" while filing ITR.
* Employee claims TDS credit as per Form 26AS against total tax liability (salary + house property + other income).
* If TDS is more than total tax liability, employee can claim refund.
---
If you want, I can help draft the relevant tax computation example or clarify how employer should handle TDS deduction on salary + rent paid. Would that help?
---
### Scenario Recap
* Employer pays rent of Rs. 20,000 per month to employee for self-leased accommodation.
* Employer deducts TDS @10% on the rent paid, i.e., Rs. 24,000 for the year.
* Employee’s **income from house property** (from this rent) is only Rs. 5,000 (likely due to allowable deductions like interest, municipal taxes, etc.).
* Question: Can the employee adjust the TDS deducted on rent against their tax liability on salary income?
---
### Important Points & Explanation
1. **Rental Income is taxable under "Income from House Property"** for the employee (less deductions).
This rent received by the employee is income other than salary.
2. **Employer deducts TDS on the rent paid to employee under Section 194-IB or 194C or similar**, but this is *not* TDS on salary under section 192.
3. **Can the TDS deducted on rent be adjusted against the employee’s overall tax liability including salary income?**
* **Yes**, the TDS deducted on rental income is reflected in the employee’s Form 26AS and can be claimed as credit against the **total tax liability of the employee**.
* Tax deducted at source is a payment of tax on behalf of the employee, regardless of the head of income on which tax is deducted.
4. **Reference: CBDT Circular No. 05/2011 dated 16-08-2011** clarifies that for computing tax deduction under section 192 (salary TDS), losses from "Income from House Property" can be taken into account. But more importantly:
* The total TDS deducted (including on house property income) is available as credit to the employee when filing income tax returns.
* This TDS can reduce the tax payable on salary or any other income head.
5. **So effectively, the TDS deducted on rental income can be adjusted against tax liability on salary income when the employee files their income tax return.**
---
### Summary:
| Question | Answer |
| ------------------------------------------------ | --------------------------------------------------------------------------------------------------------------- |
| Is rent paid by employer to employee taxable? | Yes, under Income from House Property. |
| Can employer deduct TDS on this rent? | Yes, under relevant TDS sections (e.g., 194-IB or 194C). |
| Can employee adjust this TDS against salary tax? | Yes, the TDS deducted on rent can be adjusted against total tax liability including salary tax when filing ITR. |
| Reference | CBDT Circular No. 05/2011 dated 16-08-2011 and Income Tax Act provisions. |
---
### Practical implication:
* Employer deducts TDS @10% on rent paid.
* Employee includes rent income in "House Property" while filing ITR.
* Employee claims TDS credit as per Form 26AS against total tax liability (salary + house property + other income).
* If TDS is more than total tax liability, employee can claim refund.
---
If you want, I can help draft the relevant tax computation example or clarify how employer should handle TDS deduction on salary + rent paid. Would that help?
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