TDS under section 195

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This discussion clarifies whether Tax Deducted at Source (TDS) under Section 195 of the Income Tax Act is applicable when rent is paid to a resident father who holds a Power of Attorney for an NRI property owner. The consensus is that TDS is indeed applicable because the ultimate owner of the property is an NRI, and the rental income is attributable to them, even if the rent is physically paid to their representative in India.

prasad Nilugal

prasad Nilugal (Querist)

01 August 2023 Mr A who is NRI , given power of Attorney to Mr B ( Resident ) is Father . Mr B Father on the basis of Power of Attorney rented out property of Mr A to Mr C ( lets say with consent of Mr A ) , with an agreement .

now question is , C while paying the Rent to Mr B ,( Resident Father) should deduct TDS under section 195 of the Income Tax act .

Note - In agreement nothing has been mentioned regarding Mr A ( NRI )

Thanks in Advance .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

01 August 2023 Under section 195 of the IT Act, rent received by an NRI on property located in India, TDS at the rate of 30% of the rent paid should be deducted by the payer. The NRI receiving the rent can make a formal request to the jurisdictional officer for a lower TDS deduction.

prasad Nilugal

prasad Nilugal (Querist)

01 August 2023 But, Sir we are paying rent to his resident father, (power of Attorney is given by NRI to father ) Our rent agreement is with him father . also in rent agreement nothing is mentioned regarding NRI . please guide.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

01 August 2023 No problem in such a case.

prasad Nilugal

prasad Nilugal (Querist)

01 August 2023 So , not necessary to deduct TDS , Correct Sir , or should I apply for Advance ruling .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

01 August 2023 No need for advance ruling.
195 TDS applicable as owner of the house is NRI and income is addressable in the hands of NRI.

prasad Nilugal

prasad Nilugal (Querist)

01 August 2023 Ok, Thank you Sir .