As per section 194 I TDS need to be deducted on payment of RENT when it exceeds the threshold ceiling limit. (Current limit Rs. 1,80,000/-) i.e Rs. 15,000/-. Per month.
Now What is called RENT as per section 194 I??
‘Rent’ means any payment, by whatever name called, under any lease, sub lease, tenancy or any other agreement or agreement for the use of (either separately or together) any –
Whether or not any or all of the above are owned by the payee.
Service tax paid by the tenant does not partake the nature of income of landlord.
The landlord acts as only a collecting agency for government for collection of service tax.
Therefore tds need to be deducted only on the rent amount ( i.e Excluding service tax portion).
So in your case while computing the threshold limit, you need to consider only the rent amount . Since it is less than 15000 P.M., so you need not deduct tax at source since its well withing the statutory limit..
Refer circular No. 4/2008, Dated 28-04-2008 issued by CBDT.