03 June 2009
No TDS is deductible u/s 194I as you have rightly mentioned that the company is paying to the employee not to the land lord. It appears you are paying to employee to meet his accommodation requirement. Thus this is a House Rent allowance in the hands of the employee. HRA is taxable the hands of the employee, however the entire amount is not taxable. You should refer section 10(13A) of IT Act to calculate Taxable HRA in the hands of the employee. As per section 10 (13A) HRA is exempt in the hands of the employee minimum of the following -
Actual HRA 40% or 50% of Salary depending upon city of resident. Excess of rent paid over 10% of salary. The taxable portion so arrived at should be added to the salary and tax be deducted accordingly.
03 June 2009
Hi, Calculate the HRA taxable in the hands of employee. Then calculate the total estimated income of employee. Calculate the tax payable by employee. Then deduct the estimated tax payable evenly thoughout the year. Refer the details given by Rajesh Dua for calculating taxable HRA.
03 June 2009
Mr Ratan and Rajesh are correct as the amount paid to employee is in the nature of HRA and not rent, so no TDS u/s 194I. CAlculate HRA taxable as told by Mr Rajesh.
03 June 2009
I was expecting your reply like this only. It is separate amount paid to employee. This will booked under the head salary.
You need to add total 25000 to the income & deduct the tax accordingly. You May have question why not difference amount? i.e difference between rent paid to employee & rent paid by employee.
This may create the complications to you, as the same is treated as salary. Like we pay salary & deduct tax on total salary not on difference amount (salary less expenses incurred). Hence this entire amount will be taxed as salary.
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