TDS Applicability on Arrears of Rent to KINFRA

This query is : Resolved

SUDHEEP M (Querist)
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23 March 2024 Sir,

I want to know the TDS applicability in respect of the below transaction. One of my group Company which was liable for audit availed vacant land under government scheme from KINFR (a government undertaking). During the financial year 2023-24 they have issued invoice under SAC 997212 for a total value of Rs. 284049 and out of the total amount Rs. 139359 was relates to the previous financial year 2022-23. Respective financial year invoices were issued separately. Whether TDS was applicable in this case?.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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11 July 2024 In the scenario described, where your group company availed vacant land under a government scheme from KINFR and subsequently received an invoice for services provided under SAC 997212, the applicability of TDS (Tax Deducted at Source) needs to be analyzed based on the specific details provided:

1. **Nature of Transaction**: The company availed vacant land from KINFR, a government undertaking, under a government scheme. Subsequently, an invoice was issued under SAC 997212, which typically pertains to services provided by real estate services involving land or land-related services.

2. **TDS Applicability**: TDS under Section 194-I of the Income Tax Act, 1961 is applicable on payments made for rent. However, in your case, the transaction involves availing vacant land under a scheme, which is not straightforwardly covered under Section 194-I.

3. **Services under SAC 997212**: SAC 997212 pertains to "Services involving commercial use or exploitation of any event." If the invoice relates to services provided by KINFR that fall under this category, TDS might be applicable under Section 194C (for payments to contractors) or Section 194J (for professional or technical services) depending on the specific nature of services rendered.

4. **Timing of Invoice and TDS Liability**: TDS liability arises at the time of credit of such income to the account of the payee or at the time of payment, whichever is earlier. If the invoice is issued in the financial year 2023-24 for services related to earlier years (like 2022-23), the timing of TDS deduction would be based on when the payment or credit for these services was made.

5. **Threshold Limit**: TDS is generally applicable if the amount exceeds the threshold limits specified under the respective sections (e.g., Rs. 30,000 under Section 194C and Rs. 1,80,000 under Section 194J for FY 2023-24).

**Conclusion**:
- Given the details provided, if the invoice under SAC 997212 pertains to services provided by KINFR related to the vacant land availed under the government scheme, TDS could be applicable under Section 194C or Section 194J, depending on the nature of services.
- The applicability of TDS also depends on whether the payment exceeds the threshold limits specified under the respective sections for FY 2023-24.
- It is advisable to review the specific nature of services provided by KINFR, the terms of the agreement, and consult with a tax advisor to determine the exact applicability of TDS and ensure compliance with all relevant tax regulations.