opening of guest house

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2011 Sir,
A company wants to take a building on rent and wants to use this building as a guest house for staff as well as for foreign buyers. My query is that ::
a) is there are any legal formalities for income tax as well as for excise purposes/ROC.
Please help me in this matter

Thanks

CA Sumat Singhal

CA Sumat Singhal (Expert)
Follow

10 April 2011 Under Income Tax Act, the following issue may emerge...
Here we shall discuss Income Tax to be deducted on payments of Rent as per Section 194-I of the Indian Income Tax Act.
1 Person responsible for paying any income by way of rent to a resident shall deduct income tax at source on such payment at the time of payment or credit whichever is earlier.
The liability to deduct tax at source is on any person except individual and HUF. However, individual and HUF are also covered by liability to deduct tax at source if their books are required to be audited under section 44AB during the immediately preceding financial year. [The turnover from business/profession exceeds the limits specified u/s 44AB during the financial year immediately preceding the financial year in which the rent is paid or credited].
No income tax is required to be deducted at source if the aggregate amount of rent credited/paid or likely to be credited/paid to a single payee during the financial year does not exceed Rs.1,80,000/- from 1.7.2010 (previously it was Rs.1,20,000).
Important Note: As per section 206AA, with effect from 1.4.2010, every person who receives income subject to TDS under chapter XVIIB (covers all TDS cases) shall furnish to the deductor, his PAN. If PAN is not so furnished, the rate of TDS will be at the rates specified in the Act or at the rates currently in force or at 20% whichever is higher. Please note that this applies to non residents also.
RATE OF TDS
Use of any land or building including factory building or land appurtenant to a building including factory building or furniture or fittings :10%

Other members opinion are invited
regards,
CS SUMAT SINGHAL