26 May 2010
Facts: 1)An amount of Rs.10 lacs has been received as Advance Rent, which would be adjusted against Rent payable over a period of 4-years. 2)The amount of Rent paid would be claimed as an expense over the 4 year period.
Query: Is TDS required to be deducted on the entire 10 lacs in the year of receipt or Whether TDS is to be deducted on only that portion of amount which is adjusted annually as Rent.
26 May 2010
TDS TO DEDUCTED ON THE DATE OF PAYMENT OR CREDIT WHICHEVER IS EARLIER. SO TDS NEED TO BE DEDUCTED ON ENTIRE RS.10 LACS. ON LY CONTENTION IS THAT WHY DEDUCT TDS ON INCOME WHICH WILL ACCRUE OVER NEXT 3 YEARS. IN MY VIEW SINCE PAYMENT IS MADE ON ACCOUNT OF RENT TDS TO BE DEDUCTED TO FULL AMOUNT. VIEWS OF OTHER EXPERTS SOLICITED.
26 May 2010
Agree with Sanjay ji. TDS is to be deducted on Rs.10 lacs.
There is no provision in the act, that whether you are claiming as an expenses or not, tds has to be deducted as per the nature of payments.
In some cases, the tds is deducted on some payments which are capitalised. It is not concerned whether we claim as an expenses or not. It is concerned with the nature of payment and it has to be deducted on the date of payment or credit whichever is earlier.
In your case, even though payment is made for 4 years, tds is to be deducted on the whole amount of Rs.10 lacs.
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