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Query regarding tds on rent

faraz094 (Student CA IPC / IPCC) (142 Points)

29 December 2018

One of my friend has started business by establishing partnership firm with his mother and he is paying rent on behalf of Firm Rs. 1,20,000 /-per month for Business place. The rent agreement executed between landlord and my friend. Now the question is whether he is liable to deduct TDS on rent ,as he is individual and were not liable for Tax audit during FY 2017-18. Because agreement was not made in the name of Firm.

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12 Replies

Harshavardhan (student) (138 Points)
Replied 29 December 2018

If the individual has TAN no.then he is liable to deduct TDS @ 5% as the rent paid or payable is more than Rs.50000 p.m.

Harshavardhan (student) (138 Points)
Replied 29 December 2018

The relevant sec to deduct TDS is 194IB

1 Like

NS KHARTHIKVIJAYAN (15 Points)
Replied 29 December 2018

If he is subjected to Tax Audit in the previous year , Then he is liable to deduct TDS on rent , If the amount exceeds 1.8Lacs

S ELAVARASI (ACCOUNTANT) (2975 Points)
Replied 29 December 2018

Who will book the rent expense in his accounts...?

Rakesh Bandal (Self Employed and Agriculture) (1349 Points)
Replied 29 December 2018

it is better to book rent expenses in firm not in individual for tax benefits,

deduct TDS from firm and amount paid by partner on behalf of firm show it as capital contribution

if you have opted for 44AD then case will be diffrent

umesh kumar sidana (ca) (143 Points)
Replied 29 December 2018

you have to deduct tds only if your firm is audited us 44ab.

(Guest)

Originally posted by : faraz094
	One of my friend has started business by establishing partnership firm with his mother and he is paying rent on behalf of Firm Rs. 1,20,000 /-per month for Business place. The rent agreement executed between landlord and my friend. Now the question is whether he is liable to deduct TDS on rent ,as he is individual and were not liable for Tax audit during FY 2017-18. Because agreement was not made in the name of Firm.

If the firm is paying rent, then TDS is applicable. Who are the contract parties or whether tax audit is applicable, is not relevant here.

Kishan Kashyap (Student) (79 Points)
Replied 31 December 2018

related sec is 194-I

Anirban Sinha (CA in service) (727 Points)
Replied 03 January 2019

If you show the expenses in the books of accounts of the firm then you are liable to deduct TDS and if you are liable o Tax audit u/s 44 AB then you are liable to deduct tax @ 10%.

CA. Umesh kumar (ca.umesh11@gmail.com) (1465 Points)
Replied 26 January 2019

Section 194IB introduced by Finance act 2017, If an individual pay rent more than 50000 per month for residential or commercial purpose then TDS is required to be deducted @ 5% in the last month of financial year for whole year and tds is to be deposited by april 30, this section apply even if he is not covered under tax audit. Individual is not required to take TAN number.

CA Umesh Kumar- 9717597230

CA Inderjeet Sunda (Chartered Accountant) (355 Points)
Replied 22 February 2019

If Rent Agreement was not made then Such Rent shall not be treated as Business Expenses i.e. such Rent shall be treated as Personal Nature. In this your friend have ti Deduct TDS under sec 194IA @ 5 % of Rent Paid .

CA Himanshu Gandotra (Chartered Accountant) (1160 Points)
Replied 22 February 2019

Look this is not the right concept that place is used by firm and rent is paid by individual....this means individual has sublet the place to firm and therefore firm has to pay rent to individual and correspondingly deduct tds of the partner.....