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Payment of Rent by the firm on behalf of the partners - TDS?

TDS 2150 views 1 replies

Arun N

Professional

29 Points Joined June 2009

Applicability: Asst Yr 2011-12 (Accounting 2010-11)

Lessors are 3 equal joint owners of a property;

Lessees are 2 Individuals;

Rent payable is 13000/- to EACH of 3 JOINT OWNERS (i.e 13000/- * 3 = 39000/- p.m)

At a later stage, the said Lessees formed a partnership firm and are conducting business in the above rented property.

Now, the payment of rent is made from the firm.

Queries:

1) is TDS applicable in such cases (where the firm is not the original tenant)

2) Even if TDS is applicable, is threshold limit of 180K per recepient of Rent bars from making TDS

Thanks and regards in advance

Replies (1)

Amir

Learner

4016 Points Joined December 2009

Dear Sir,

I am interested to know whether "Partnership Firm" is claiming these Rent payments as "expenses"

I m aware that TDS rules casts the responsibility of Deduction on the "PAYER" & has nothing to do whether the said payment is being claimed as expenses or not. But the peculiar relation between partner & partnership firm makes it necessay to look into the deatils whether payment was made against expenses or against the personal drawings of the partners.

1) Yes, TDS will apply if Firm will be claiming it as expenses.

2) Yes, the limit specified u/s 194I should be linked with each co-owner separately.(i:e per receipient ) & hence TDS is not required.