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Tds on nri payment of rent for commercial buildings

Gopinath (Tax consultant) (33 Points)

12 August 2016

All Experts,

May I request the experts to let me know the TDS % to be deducted for

rental payments made to NRI for their commercial buildings rentals. To my

knowledge it comes u/s195 and tds to be deducted @ 30.9%(30%+EC3%). Please

tell me whether I am right. Please advise

Regards,

S.Gopinath

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4 Replies

Amit Kanunga (Article Assistant and Post Gradute) (644 Points)
Replied 12 August 2016

Section 195: Payment of any other sum to a Non-resident	%
a) Income in respect of investment made by a Non-resident Indian Citizen	20
b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen	10
c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112	10
d) Income by way of short-term capital gains referred to in Section 111A	15
e) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses (33), (36) and (38) of Section 10]	20
f) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)	20
g) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) ofSection 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India	10
h) Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy	10
i) Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy	10
j) Any other income	30

Gopinath (Tax consultant) (33 Points)
Replied 12 November 2019

Amit Kanunga

Your reply does not say anything about the percentage of tds deducted as i asked in the above query.

CA Arun Tiwari (Partner) (3720 Points)
Replied 07 January 2020

Sec 195 of the Income Tax act states that when the payment is made to Non Resident of India by the Indian Resident of India then TDS is required to be deducted by the Indian Resident of India at the rate in force or DTAA rate (whichever is beneficial to the assessee.

So in the Instant case ,TDS is required to be deducted on payment of Rent to NRI.

CA Arun Tiwari (Partner) (3720 Points)
Replied 13 January 2020

When the rental payment made to the NRI by the Indian Resident then he is required to deduct TDS under section 195 . Section 195 requires the Indian Resident to deduct TDS when payment made to NRI at the rate in force (20%) or DTAA rate (whichever is beneficial to the assessee .