Company is availing maintenance services from RIICO in respect of its Industrial plot allotted to it on long term lease. RIICO is also charging Service Tax on the same. Whether the Compay is under obligation to deduct TDS on the service charges payable towards availing of maintenance services.
Regards,
Tilak Sethi
Mr.Tilak Sethi
CBDT in circular 4/2008 dated 28-4-2008 has clarified regarding rent, service tax on rent and deduction of tax at source on rent. I am herewith attaching the copy of the circular. Please go through the circular, you will get the clarification.
Best Wishes
Sathikonda
Mr.Tilak Sethi
In the circular the CBDT has clearly clarified as under:
rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,-
(a) land; or
(b) building (including factory building); or
(c) land appurtenant to a building (including factory building); or
(d) machinery; or
(e) plant; or
(f) equipment; or
(g) furniture; or
(h) fittings,
whether or not any or all of the above are owned by the payee;
Hence the maintenance charges/service charges paid by the company also fall under the ambit of "rent" as clarified by the CBDT in the circular. Hence tax must be deducted at source from the payments made.
If the payee has been granted exeption under the provisions of section 197 the specific authorisation by the concerned assessing officer will issue to the person making the payment with a direction either to deduct tax at lower rate or at nil rate. In the absence of such an order exempting the payeee the company should deduct the tax at source as provided in the section. If the person making the payment (the company) fails to deduct tax at source the company is a defaulter and should face the penal action that may be taken by the concerned assessing officer.
Best Wishes
Sathikonda
CAclubindia
