Hi,
Mi concern is paying a monthly rent of Rs.72000 which includes a property tax of Rs.1990/-. service tax at the rate of 10.3% is applicable to it. Kindly say me how i should deduct the TDS and on which amount i have to deduct. I want to know whether the TDS of 15.45% is to be calculated on the basic of Rs.72000 and also on the service tax amount too... pls do the needful.
ITDS shall be deducted only on Rs. 72000 because as per IT Department's Circular issued in 2008-09, ITDS on rent shall be deducted before considering Service Tax on rent. Please go to www.incometaxindia.gov.in and see the circular in 2008-09.
Amount = 72000
rate = 20*1.03= 20.6 (excluding surcharge),( consider surcharge if necessary )
tds will be deducted on totla amount reason being tds is deducted on ANY SUM PAID i.e. including service tax and property tax etc. (as per language of LAW)
TDS to be deducted only on the amount of rent(including property taxes) and not on service tax as per cirular no. 4/2008, DATED 28-4-2008. The circular is also attached herewith. Hence TDS on Rs. 72,000/- @ 15.45% if payee is non company and if company 20.6%
TDS ON RENT ONLY WILL DEDUCTED BY THE DEDUCTUR WHEN HE PAY MORE THAN 120000 RS. AS RENT YEARLY
C.Y T..D.S RATE 15.45
FROM 1.10.09 10.30
TDS to be deducted on Basic Rent amount of Rs. 72,000 only. Please go through clarifications below:
- As per Circular No. 718 dated August 22, 1995, the basis of tax deduction at source under section 194-I is " Income by way of Rent", to mean any payment under any lease, tenancy, agreement., etc. for use of land or building. Thus, if the Municipal taxes, Ground Rent, Property Taxes etc., are borne by Tenant, no tax will be deducted on such sum.
- As per clarification made by CICULAR NO. 4/2008 da. 28-04-2008 of Income Tax Department, where it is clearly stated that TDS on rent will be deducted without including service tax component. this is also supported by interpretation of section 194-I, which state that any person responsible for paying Rent should deduct tax at source, unlike under section 194C/194J, which state that any person responsible for paying any sum should deduct tax at source, which means section 194C/194J attract inclusion of service tax. But section 194-I and the said circular NO. 4/2008 da. 28-04-2008 clearly ruled out any inclusion of service tax for TDS dedcution on Rent.
Considering abovesaid, TDS should be dedcuted only on Basic Rent of Rs. 72,000 at applicable rate.
Trust abovesaid will clarify your queries.
TDS is to be calculated on only basic amount amt of Rs. 72000/- excluding service tax
Income Tax has to be deducted only on amount of rent and not on Service Tax. The same has also been clarified by CBDT vide CICULAR NO. 4/2008 dated 28-04-2008
TDS should be deducted only on amt. of Rent and not that of on Service Tax. If the payee is Individual or HUF you should deduct TDS @ 16.995% and if the payee is other than Individual or HUF then ou should be deduct TDS @ 22.66% On basic amt. only.
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