I recently joined a firm. from april 2012 the rent of the firm is paid in cash that is 40000 (forty thousand) per month totaling 160000 for 4 months ( april, may, june july) and no TDS has been paid. please provide steps to be followed to rectify this.
9 Replies
muthu
(audit)
(88 Points)
Replied 14 August 2012
hai sudipta
actuely head of the Rent
Plant and Machinery 10%
Rent for Building 10% so you can deducted after exceediding 18,0000
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 14 August 2012
hi
TDS for P&M is 2% not 10%
and BTW, cant help but notice, isnt the expense disallowed already under Income tax Act as any payment made otherwise than by crossed cheque is disallowed if such amount is above 20,000 Rs. and your amount is 40K,... Right???? So, anyway the expense is disallowed so, TDS is irrelevant
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 14 August 2012
if you still want to provide TDS, then during next payment hold TDS for all the previous months payments too, thats it, as rent has not crossed 180,000, no problem with relation to Interest
NEERAJ KUMAR
(CA FINAL)
(78 Points)
Replied 14 August 2012
Hello Sudipta,
The all above said right. One thing is more important to read the Rent Agreement with regard to number of Landlords. If number of landlords is two or more, in that case proportionate rent to each landlord should not exceed Rs.20000/- then expenses are allowed. If in your case only one landlord then you may suggest to allow the same expenses by entering two different dates with maximum amount Rs.20000/- each. (practicle life fanda)
Further, as all said TDS on Rent on Plant/Machinery is 2% otherwise 10%. Upto threshold limit Rs.180000/-, no TDS is required. After Rs.180000/- TDS is required from Rs.1. Further no interest liability will arise if deposited by 7th of next month of getting threshold limit exceed Rs.180000/-
Thanks
Neeraj Kumar
Sudipta sarkar
(article assistant)
(26 Points)
Replied 15 August 2012
i knw all clause under 194 I bt according to Sec 40A3 expenses cant be paid in cash above 20000 in a day. n firm had also nt deducted TDS. so m just trying find a way.
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 16 August 2012
It is not about 20K in a day but towards any particular bill also, so a month TDS if the payee is a single person then you cant paid more than 19999 Rs. by cash.
Now, all you have to do is look up rent agreement to see how may landlords for the Rented property and rent to each landlords.
If only one landlord then a possible solution is give a cheque for each rent and collect back the cash. thus making all the rent payment in cheque only or you know partial payment where you show 19999 is cash and rest in cheque
SANJEEV KUMAR VIJAY
(ASST. MANAGER-ACCOUNTS/FINANCE)
(26 Points)
Replied 16 August 2012
Hi,
To avoid any disallowance in future, you can pay Rent through Cheque after deducting TDS of 10%.
You have already paid rent for four months and might be TDS return already filed by firm on quaterly basis.
If they have not yet made rent agreement , pl suggest them to prepare rent agreement and deduct TDS @ 10% from Aug'12 rental payment on Rs. 200000 ie you can deduct 20000 TDS and deposit TDS accordingly.
or you can suggest landlord to prepare rent agreement and sub divide rent into 3 persons equally so in this case no TDS would be required to deduct as threshold limit will not be crossed Rs.180000 per person per year.
You have to mention Rent aleady paid to three different person of family of this landlord accordingly In this you can say that you have not in default.
You have to change name of person in your books of accounts to three person to avoid any TDS issue.
Regards.
SKV
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