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Tds on rent

P GUNAPALAN (PROPREITOR) (66 Points)

15 March 2016

Dear Professionals, we are a partnership firm paying rent to a Registered Society engaged in non profitable activity. They normally provide us a letter from the IT dept. exempting them from TDS to us.Normally this letter is obtained by them middle of the financial year but, providing exemption for the finanancial year. This year too expecting the same we paid the rents for April, May and June without deduting TDS. As they failed to provide us the letter we deduted TDS at 10% for the entire year in March 2016 and settled the rent. Our doubts are,

1.Are we liable for payment of interest on TDS not deducted for the payments made for April,May and June? If so at what rate?

2. Are we liable for penalty for non filing of TDS returns on quartely basis ? If yes at what rate?

3. What is the correct procedure to handle our situation?

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4 Replies

CA Raj Doshi (Practising CA) (8924 Points)
Replied 15 March 2016

Show the amount in the tds return for march by disclosing the annual rent and deduction of tax thereon. Eg. In March tds return , show that amount paid or credited = Rs.120000 ( annual rent ). Tds deducted = Rs.12000. So you can atleast avoid the interest penalty for tds as of now. However , during assessment, if AO points out the same , then you will have to accordingly handle the case.

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Varun Sharma (Proprietor-Sharma Varun & Co.) (244 Points)
Replied 16 March 2016

Consequences of failure to timely deduct tax:

Interest – 1% pm of the tax deductible.

Penalty – equal to the amount of tax deductible but not deducted.

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CA Raj Doshi (Practising CA) (8924 Points)
Replied 16 March 2016

Late filing fee for tds return = Rs.200 per day subject to maximum of tax due.

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Praveen Somani (CA) (21 Points)
Replied 21 March 2016

Assuming that you have paid rent after June on deduction of TDS, and up to June, 2015 you have not paid rent amount more then 1,80,000.

Now understand your scenario in this way, as you have not paid rent of more then 1,80,000 without TDS. and as soon as limit of 1,80,000 is crossed you have made provision of TDS.

So, you are not liable to Any interest, penalty.

JUST MAKE SURE AT THE YEAR END YOU DEDUCTED TDS ON WHOLE AMOUNT PAID DURING THE YEAR AT THE END OF MARCH, 2016