TDS ON COMPENSATION CHARGES RECEIVED ON RENTED PROPERTY

 

Q. If the owner of the party has made the agreement with the tenant for 9 years and the lock in period is 3 years but the tenant has use the property only for one year and for one year rent has also been paid and TDS also deducted  and the tenant is vacate the property after one year and tenant is paying the compensation charges for not using the property remaining two years in that case the TDS will be applicable on Compensation charges or not and if it is applicable under which section please advice to me .
Replies (1)

Mr. Gopal Kumar Agarwal

In your case the provisions of section 23(1)(b) applies.  The amount received as a compensations is the annual value of the house property.  If the impugned amount of compensation together with regular rent falls under the ambit of section 194I, tax has to be deducted accordingly.

Best Wishes

Sathikonda

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