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Tds on rent under section 194i

CA Vijay kumar (manager finance and accounts) (27 Points)

22 July 2013

hi friends

can any one tell me that what amount to be included for calculation of limit of RS 180000 under secyion 194I.

case-

we are paying rent monthly 15400 including service tax. whether we are resposponsible for deduction of TDS under 194i.

rent paid withoutt service tax is 13705 PM that is not reach the limit of Rs 180000.

please make suggetion

thanks all but please make reply must support with any case law or any notification .

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18 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 22 July 2013

TDS u/s 194i is the only section wherein TDS is not to be deducted on service tax portion. So I think you need not deduct TDS because it is less than 15000 pm.

But wait for others to reply.

CA Pooja Agarwal (Chartered Accountant) (3228 Points)
Replied 22 July 2013

supporting the view of mihir..

for computation of 180000 limit, amount exclisive of st should be considered.

so in your cas no tds is applicable

1 Like

CA Kunal Mishra (Consultancy Service) (172 Points)
Replied 22 July 2013

Yes, TDS is deductible as the payment made during the year exceeds Rs.1,80,000, but TDS will be deducted on rent excluding service tax, as per 194 I tds to be deducted on payment of income & therefore tds is deducted on pure rent i.e. excluding ST.

Mihir (Wealth Manager) (5293 Points)
Replied 22 July 2013

On second thought, even though TDS deduction is on the rent excluding the service tax portion, the bill of rent received by the tenant has to be paid in full in the books of account after deducting TDS. TDS will not be deducted on service tax portion, nevertheless the service tax portion happens to be an expense for the tenant and hence becomes a total rent. Service tax portion will be payable by the tenant even if TDS is not deducted on that. How else will the tenant account for the service tax portion which is part of rent and payable? So, yes, TDS will be applicable because the total bill exceeds 180000.

CA CS Roshan Begrajka (Chartered Accountants) (267 Points)
Replied 22 July 2013

if the tenants take a credit of service tax then rent amount not exceeds Rs. 180000 pa so NO TDS.

but if tenants are not eligible to take a credit of service tax then the rent amount exceeds Rs. 180000/- so eligible for TDS against rent bill.

CA Kunal Mishra (Consultancy Service) (172 Points)
Replied 22 July 2013

I totally disagree from Mr.Roshan's view. There is no point of cenvat credit.

amola (CA FINAL STUDENT) (159 Points)
Replied 22 July 2013

TDS is deducted on rent amount only excluding Service Tax .

(Guest)

As per section 194 I TDS need to be deducted on payment of RENT when it exceeds the threshold ceiling limit. (Current limit Rs. 1,80,000/-) i.e Rs. 15,000/-. Per month.

Now What is called RENT as per section 194 I??

‘Rent’ means any payment, by whatever name called, under any lease, sub lease, tenancy or any other agreement or agreement for the use of (either separately or together) any –

Land, or
Building (including factory building), or
Machinery, or
Plant, or
Equipment, or
Furniture, or
Fittings

Whether or not any or all of the above are owned by the payee.

Service tax paid by the tenant does not partake the nature of income of landlord.

The landlord acts as only a collecting agency for government for collection of service tax.

Therefore tds need to be deducted only on the rent amount ( i.e Excluding service tax portion).

So in your case while computing the threshold limit, you need to consider only the rent amount . Since it is less than 15000 P.M., so you need not deduct tax at source since its well withing the statutory limit..

Refer circular No. 4/2008, Dated 28-04-2008 issued by CBDT.

CA CS Roshan Begrajka (Chartered Accountants) (267 Points)
Replied 22 July 2013

thnx for clarification Mr kunal Mishra ji and Mr. P!ll @ !

Mihir Doshi (B.Com, CA, CS, LLB) (2187 Points)
Replied 23 July 2013

Service Tax Amout will be excluded while computation of TDS u/s 194I

Refer Circular

Circular No. 4/2008 dated 28/04/2008.
Service tax charged by the Landlord shall not be included for
calculating the amount of tax to be deducted from the rent.

Atul Kumar (CA) (504 Points)
Replied 23 July 2013

No question of deducting TDS . Even the law provides that when deducting TDS u/s 194I, it is to be deducted only on rent portion excluding service tax wherever applicable.

Grv Bst (Service) (125 Points)
Replied 23 July 2013

Mr. Vijay, I believe you now have found solution to your query as given above. Landlord is merely acting as a collecting agent for Government. For Section 194I, service tax element is excluded while calculating the limit of Rs.1,80,000. Thanking everybody for their inputs.

SREEPAL REDDY GURRALA (EXECUTIVE) (38 Points)
Replied 24 July 2013

TDS is deductible as the payment made during the year exceeds Rs.1,80,000, but TDS will be deducted on rent excluding service tax, as per 194 I tds to be deducted on payment of income & therefore tds is not applicable