Rental income plus service charges
This query is : Resolved
14 October 2011
If Premises is given for utilization and the compensation is received in 2 ways
1. Rental Income Rs 15,000/- Per month
2. Charges for Services provided for amenities Rs 10,000/- Per month.
Will it attract TDS Provisions ?
1. Rental Income Rs 15,000/- Per month
2. Charges for Services provided for amenities Rs 10,000/- Per month.
Will it attract TDS Provisions ?
14 October 2011
If the service charges are for furnitures and fixtures in the flat then it satisfies the criteria for rent.
TDS to be deducted on Rs. 25000pm @10% u/s 194I as the payment exceeds Rs. 180000.
But if the service charges are of other services like electricity, water, guard etc then it is in the nature of professional services.
In such case payment under 194I is 15000*12 = 180,000 - dont deduct TDS (as payment does not exceed 180000)
For other services deduct tds on Rs10000*12 = Rs120000 @10% u/s 194J
TDS to be deducted on Rs. 25000pm @10% u/s 194I as the payment exceeds Rs. 180000.
But if the service charges are of other services like electricity, water, guard etc then it is in the nature of professional services.
In such case payment under 194I is 15000*12 = 180,000 - dont deduct TDS (as payment does not exceed 180000)
For other services deduct tds on Rs10000*12 = Rs120000 @10% u/s 194J
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15 October 2011
We should not deduct tds for electricity and water charges as the same is reimbursed to the landlord.
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15 October 2011
Only if they are actual, it would qualify as reimbursement.
But if they are fixed charges, you cannot say them to be of reimbursement nature !
But if they are fixed charges, you cannot say them to be of reimbursement nature !
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15 October 2011
See in electricity upto certain level we need to pay minimum charge and that charge is fixed and you cannot deduct tds on that.
15 October 2011
The arrangement between the tenant and landlord is important. Let us discuss the situation practically.
If the payment for services is of gross nature (no bifurcation is provided) how will the tenant know how much he is paying for water, how much for electricity, how much for general maintenance, guard, gardening etc.. He has to deduct TDS on gross amount for all practical purposes.
Moreover, how will the tenant come to know how much of the electricity charges paid is fixed part. It is of no concern to him, when he is paying a fixed lumpsum amount every month.
If the payment for services is of gross nature (no bifurcation is provided) how will the tenant know how much he is paying for water, how much for electricity, how much for general maintenance, guard, gardening etc.. He has to deduct TDS on gross amount for all practical purposes.
Moreover, how will the tenant come to know how much of the electricity charges paid is fixed part. It is of no concern to him, when he is paying a fixed lumpsum amount every month.
15 October 2011
I agree with all other expenditure except electricity....
15 October 2011
I am not questioning what you are saying. But Sir, practically it is not possible as the tenant is never seeing the electricity bill physically. He knows what he has to pay and that is the fixed amount.
19 October 2011
You will have to deduct TDS on the gross payments ie 25,000.
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