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Tds on advance rent

Atul Bajaj (CA) (63 Points)

18 February 2013  

Hi,
If a person Pays Rent for Say 3 years amounting to 60,00,000/- and deducts the TDS on that for Rs. 6,00,000/-.
Will the Receiver of rent get TDS credit in the same year.
How the same issue will be dealt with in accounts of Tenant and landlord both?


 3 Replies

Sumit Grover (Chartered Accountant ) (3647 Points)
Replied 18 February 2013

in the books of Tenant

Advance Rent(or Prepaid Expenses) A/c Dr. 60,00,000

                                                  To TDS Payable                   6,00,000

                                                  To Party A/c                           54,00,000

Party A/c Dr.      54,00,000

            TO Bank A/c         54,00,000

 

Then at the end of every year, pass another entry as follows:

Rent A/c Dr. 20,00,000

             To Advance Rent A/c     20,00,000

 

In the books of Landlord

Bank A/c Dr.                       54,00,000

TDS Receoverable A/c        6,00,000

             TO Advance Rent A/c                60,00,000

 

Then at the end of every year, pass another entry as follows:

Advance Rent A/c Dr.    20,00,000

             To Rent Income A/c              20,00,000 

Arvind Khemka (practicing CA) (210 Points)
Replied 18 February 2013

yes credit of tds will be received in the same year

Sumit Grover (Chartered Accountant ) (3647 Points)
Replied 18 February 2013

Circular 5/2001 dated 2-March-2001 issued by CBDT states that in case where advance rent is spread over more than one financial year and tax is deducted thereon, credit shall be allowed in the same proportion in which such income is offered for taxation for different assessment years based on the single Certificate furnished for tax so deducted on the entire advance rent


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