Property related TDS queries

TDS 6509 views 20 replies

P Gupta

practice

75 Points Joined February 2008

Can you please answer following property related TDS queries:-

1) What is the percentage of TDS on house rent? Which of following does it depend on:-
* Total rent amount in current financial year
* Yearly rent amount (even if rent year is divided in more than 1 year)
* Total amount as per lease (for example, monthly rent multiplied by 11 months, if lease is for 11 months)
* Standard %age (for example, 10%, 20%, 30%)

2) Is TDS on rent same as TDS on any other income?

3) If house is leased to a company, it is necessary for company to deduct TDS? Should owner align with company disclosing his income in the financial year so as to fix the right TDS %age or TDS %age is always standard?

4) Is it possible to avoid TDS at rent if rent cheques are issued in the names of a number of different people (husband, wife, parents, ...), probably by including a clause in the lease that cheques will be issued in names of different people? Is rent amount considered as income of different people in this case or rent is still considered as income of owner?

Thanks in advance.

Replies (20)

CA. Kirti S. Ganatra

Service

1461 Points Joined October 2007

Main threshold is if you pay rent for more than 120000/- in a year you have to deduct TDS. For other than company it is 15.45% for company it is 20.6% (if rent is less than 1 crore) if more than 1 cr than 22.66%. TDS rate on rent is not same as for other income. Yes TDS can be avoided if paid in diffrent name. You have to prove genuine ness of transaction if asked by department. If you are individual or HUF and turn over is less than 40 Lakh than TDS rule does not apply to you

S.Srinivasaraghavan

Chief Financial Officer and Co

11318 Points Joined September 2007

1)15% if payee is an individual or HUF;
20% in other cases. It is the aggregate of the amount of rent credited/paid or likely to be credited/paid (if exceeds rs 1,20000 to the payee in a financial year). Ofcourse you have to add applicable surcharge and cess.

2) TDS on rent is governed by section 194I at percentages specified therein stated as above, but the nature is same.

3)The company has to deduct TDS.

4) It is not possible to reduce unless the payee produces a certificate from tax authorities u/s 197, for deduction of lower tax.

P Gupta

practice

75 Points Joined February 2008

Thanks a lot for replies.

However, I am not sure if I got it all right due to some contradictions.

1) TDS is applicable ONLY if rent is more than 120000/- in a financial year. For example, lessee should not deduct TDS if apartment is rented for 8 months in a financial year @ 15000 per month (irrespective of other income of owner/Lessor/payee).

2) “If you are individual or HUF and turn over is less than 40 Lakh than TDS rule does not apply to you”
Is this comment referring to owner/Lessor/payee or for Lessee?
If it is referring to owner/Lessor/payee, TDS is NOT applicable if total income of owner/Lessor/payee, who is an individual, is less than 40 Lakh (even if rent is more than 120000/-).
If it is referring to Lessee, TDS is only applicable if income of Lessee, who is a company or individual, is more than 40 Lakh AND rent is more than 120000/-.

P Gupta

practice

75 Points Joined February 2008

Can someone help me to better understand the siutation, based on the details and exmaples I mentioned in my last post.

Thanks in advance.