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Is TDS deductable for Rent Paid to APMC

FEMSG (Business) (49 Points)

21 September 2009

Is TDS deductable for Rent Paid to APMC ?

Finance ACT 2008: Exemption of 7.1 Clause (26AAB) has been inserted in section 10 to provide for tax exemption with respect to the income of an Agricultural Produce Marketing Committee or Board, which has been constituted under any law for the purpose of regulating the marketing of agricultural produce.income of Agricultural Produce Marketing Committee or Board

In finance year 2008-2009 (AY 2009-2010) we paid Rent to APMC (about 7 Lakh),

We have not deducted TDS on rent as APMC now under 26AAB.

Is our action is correct? Or we have to deduct TDS? Please explain.

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4 Replies

Sunil (Trader) (2611 Points)
Replied 21 September 2009

Usually the deductee has to give you the certificate obtained from their AO for lesser or no deduction? The section 194 I does not itself provide for the exemption. Therefore the deductee should provide you with the certificate of no deduction from their AO having jurisdition. We also take such certificates from foreign shipping companies for no deduction under 194C. I think the rule would be the same. Ask the APMC and they will give you a copy of the original exemption they have.

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CA Sidhi Gaur (Chartered Accountant) (247 Points)
Replied 05 November 2009

yes, i agree..

Anumanchipalli Sathikonda (Tax Consultant) (1559 Points)
Replied 05 November 2009

Dear All

The payee must get a certificate from his assessing officer or any designated officer to the effect that no tax need be deducted from the payments being made to the payee. Such certificate is given as per the provisions of section 197. In the certificate the assessing officer/designated officer will empower the payer not to deduct tax from the payments made.

In the present case it seems that wihtout being empowered by any valid certificate thepayer has not deducted tax at source.

In such circumstances the payer is a defaulter as per the provisions of section 201.

More over the rent so paid without deduction of tax at source will not be accepted as a deductible expenditure as provided in section 40(a).

Thus the payer will have to face consequences for defaulting in deducting tax at source and will have to pay higher tax on his income as the rent paid will not be a deductible expenditure.

Best Wishes

Sathikonda