TDS

This query is : Resolved

suparna k s (Querist)
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06 October 2009 Dear All,

Rent is paid by the company to the director. The director is a foreign national resident in India. The company is debiting the Foreign company account with the rent expenditure and claiming the reimbursement of the rent.

The rent paid is not booked as expenditure. Does TDS u/s 194I to be deducted for the payment made to director. Sec 194I talks about tds deduction on any payment made in the form of rent.

Kindly throw some light on the above mentioned situation.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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07 October 2009 As you correctly said, Tax to be deducted at source if rent is paid or credited in any form. The incidence of TAX is on the receipt/accrual of rent in the hands of the recipient and not really depends whether it's your expenses or not.

There was a circular which said that tax to be deducted on Freight paid on to pay basis. Circular : No. 715, dated 8-8-1995.

Hence in my opinion even if rent is actualy incurred by another company you have to deducted TAX at source