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TDS on Rent

Shamita (Learner) (410 Points)

10 December 2009

If a prop. firm has taken a building on rent of Rs. 12000 p.m. for 11 months from 1-12-2009 to 31-10-2010, whether TDS is to be deducted.

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19 Replies

Chandni (CHARTERED ACCOUNTANT) (70 Points)
Replied 10 December 2009

only when its turnover exceeds Rs40lacs/10lac as the case may be

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Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14497 Points)
Replied 10 December 2009

TDS on Rent applicable when amount exceed 120000 in a year. in your case in first year for 4 month and second year for 6 month. if its not continue then TDs not applicable.

(Guest)

TDS is not applicable as the Rent have been paid for two different financial year

N.J.R (Practice) (346 Points)
Replied 10 December 2009

Originally posted by :DIMPY JAIN
"	only when its turnover exceeds Rs40lacs/10lac as the case may be	"

only when its turnover exceeds Rs. 40 lacs/Rs. 10 lacs (cases covered u/s 44AB) IN PRECEDING YEAR.

NARENDER PAWAR (CA final Student) (337 Points)
Replied 10 December 2009

there is tds provision not applicable, because tds provision is applicable when u paid rent rs. 120000 in a financial year, here u not made such payment so u have no need of tds deduct

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Nagarjuna Korrapati (PCC student) (44 Points)
Replied 10 December 2009

Originally posted by :Ram Avtar Singh
"	TDS on Rent applicable when amount exceed 120000 in a year. in your case in first year for 4 month and second year for 6 month. if its not continue then TDs not applicable.	"

Tushar Mahendru (Learner) (125 Points)
Replied 10 December 2009

Hi Shamita,

TDS provisions aren't applicable in aboce mentioned case.

Frndz, i thnk the condition of turnover 40lacs/ 10lacs and payment of Rs. 1,20,000 is cumulatively to be met.

Wht is your opinion??

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 10 December 2009

First of all it has to be decided whether the person who is paying rent is liable to deduct tax at source. As in the given case, the payer is a proprietor, he shall be liable only if in the preceding previous year his turnover from business has exceeded Rs. 40 lakh or from profession has exceeded Rs. 10 lakh. If the answer is yes, he has exceeded the threshold limits, then he is liable to deduct tax other wise not.

Once the liability is decided, it has to be checked whether the payment attracts TDS provisions. Sec 194 I specifies that where the rent payment exceeds Rs. 120000 in a financial year then tax has to be deducted. But in this case as the payments are spread over two financial years and in neither year do they exceed 120000 in gross, tax has not to be deducted.

Further if the contract is renewed in the year 2010, and the gross rent to the same payee exceeds Rs. 120000 in the financial year 2010-2011, tax shall have to be deducted.

(in the question it is written that the contract is for 11 months, but the actual period mentioned is only of 10 months. I think its a mistake by the author of this thread)

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