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Tds on rent paid

RAMESH (STUDENT) (106 Points)

11 December 2014

A PARTNERSHIP FIRM IS PAYING RENT OF RS 2LAC PER MONTH TO A INDIVIDUAL FOR USING HIS PREMISES FOR RESTAURANT PURPOSE... THE OWNER IS CHARGING SERVICE TAX ON SUCH RENT BUT ASKING THE FIRM(TENANT) NOT TO DEDUCT TDS..

SO KINDLY TELL ME WHAT SHOULD THE FIRM DO?

SHOULD THE FIRM CONTINUE PAYING THE RENT INCOME WITHOUT DEDUCTING TDS?? OR WHAT THE FIRM SHOULD DO?

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4 Replies

CA Prateek Garg (CA in Practice) (1447 Points)
Replied 11 December 2014

No TDS is not deductible on ST component if invoice shows the ST amt separately.

CA Prateek Garg (CA in Practice) (1447 Points)
Replied 11 December 2014

No TDS is not deductible on ST component if invoice shows the ST amt separately.

Ajay (CA Job) (512 Points)
Replied 12 December 2014

Dear Ajit

As per Circular No.4/2008 Dated 28.04.2008 (as also Circular No. 1/2014 [F.NO.275/59/2012-IT(B)], DATED 13-1-2014), Tax is to be deducted from rent after excluding the service tax component if it is shown in the bill seperately. That is, there is no TDS on service tax component as long as it is seperately mentioned in the bill.

Thus, there is relief only in respect of the service tax component. Otherwise, there is no change in the provisions of Sec.194-I. So, if the yearly rent payments exceed Rs.1,80,000, TDS still needs to be made on such payments.

It is possible that the individual landlord may have read the new (or old circular) and is under the wrong impression that whenever service tax is mentioned seperately in the bill, there is no need to make TDS by the payer.

Regards

Ajay*

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