Sanket Damodar Karve (Business) (179 Points)
25 May 2010Hi,
In case of Advance rent to be adjusted in subsequent period & amount exceeds Rs.500000/- whether TAX has to be deducted?
The subsequent period is 4 years. & the amount paid will be treated as expenses over a period of 4years?
Whtethe the deposit of Rs.5lacs would attract TDS. Please help me out with case law if any.
Regards
Rachit
(Analyst)
(913 Points)
Replied 25 May 2010
Deposit of Rs.5.00L will not attract TDS u/s.194I.
It is only on the amount of rent adjusted against this deposit annually that TDS would be attracted
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 25 May 2010
Yes TDS will be applicable u/s 194I. I dont think there is need of any case law because in section it is mentioned "amount due or paid whichever is earlier". Here you are paying the amount, so pay it after deducting TDS. But if there is any service tax included in it then that service tax should not be considered for deduction.
Sanket Damodar Karve
(Business)
(179 Points)
Replied 25 May 2010
Let me clear there is a case law from Delhi High Court CIT Vs Reebok India Company 2007.
Which says that provision of Sec 194 I will beaplicable.
I am still bit a confuse that this will be applicable in Mumbai.
Awaiting For Reply
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 25 May 2010
| Originally posted by : Sanket Damodar Karve | ||
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Let me clear there is a case law from Delhi High Court CIT Vs Reebok India Company 2007. Which says that provision of Sec 194 I will beaplicable. I am still bit a confuse that this will be applicable in Mumbai. Awaiting For Reply |
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As per my knowledge Delhi High Courts order can be used in Delhi only and not in Mumbai. But it is safe to deduct TDS coz it should be deducted.
vijay singla
(learner)
(340 Points)
Replied 25 May 2010
| Originally posted by : Shudhanshu Agrawal | ||
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Yes TDS will be applicable u/s 194I. I dont think there is need of any case law because in section it is mentioned "amount due or paid whichever is earlier". Here you are paying the amount, so pay it after deducting TDS. But if there is any service tax included in it then that service tax should not be considered for deduction. |
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sudhanshu ji rent is for 4 years and ithink it does not cross threshhold limit of rs 180000 (if aggreement is so)annually hence tds should not be deducted even payment is made in advance . pls correct me if i m wrong.
CMA.Baskar.V
(Cost Accountant)
(400 Points)
Replied 25 May 2010
I think Mr.Vijay singla stand point view is correct.
TDS deduction liabiltiy occurr only when crossing threshold limit per year.
harish sharma
(student)
(58 Points)
Replied 26 May 2010
section 194I use the word "any amount paid or credited for use of land building furniture machinary"
here the word used is any amount and not rent for current year
hence amount received as advance rent will be liable for tds in the year of receipt.
here in this regard one point is importent to note and that is that the person receiving rent will be elligible for tax credit of tds in the same proportion in which rent income will be offered for tax.
for example if advane rent received is for 3 years on which tds is 30000 than person receiving rent will take tds credit using single tds certificte for all three years of rs 10000 each of three years.
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 26 May 2010
| Originally posted by : ca.vijay singla | ||
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Originally posted by : Shudhanshu Agrawal Yes TDS will be applicable u/s 194I. I dont think there is need of any case law because in section it is mentioned "amount due or paid whichever is earlier". Here you are paying the amount, so pay it after deducting TDS. But if there is any service tax included in it then that service tax should not be considered for deduction. sudhanshu ji rent is for 4 years and ithink it does not cross threshhold limit of rs 180000 (if aggreement is so)annually hence tds should not be deducted even payment is made in advance . pls correct me if i m wrong. |
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Dear Vijay,
I am agree with Harish in this case because when you will make payment at that time the amount will be Rs. 5,00,000 and not below 1,80,000 and in section 194I "amount paid" is clearly mentioned. So you cann't say that as im paying Rs. 5,00,000 for 4 years i will not deduct TDS because per year amount will be less than Rs. 1,80,000.
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 26 May 2010
| Originally posted by : harish sharma | ||
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section 194I use the word "any amount paid or credited for use of land building furniture machinary" here the word used is any amount and not rent for current year hence amount received as advance rent will be liable for tds in the year of receipt. here in this regard one point is importent to note and that is that the person receiving rent will be elligible for tax credit of tds in the same proportion in which rent income will be offered for tax. for example if advane rent received is for 3 years on which tds is 30000 than person receiving rent will take tds credit using single tds certificte for all three years of rs 10000 each of three years. |
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Here i want to correct Mr. Harish. TDS is deposited for a particular A.Y. and that credit can be taken in that A.Y. only. You cannt take that credit in other A.Y. If excess TDS has been deducted then ask for refund but you can not carry forward TDS.
harish sharma
(student)
(58 Points)
Replied 26 May 2010
harish sharma
(student)
(58 Points)
Replied 26 May 2010
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 26 May 2010
| Originally posted by : harish sharma | ||
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mr sudhanshu to clear ur doubt see singhania text book about tax crdit |
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Thanks for telling me. Yeah i have checked it. Finance Act 2009 has inserted a Section 199(iiia) and there i got your point.
vijay singla
(learner)
(340 Points)
Replied 26 May 2010
| Originally posted by : harish sharma | ||
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section 194I use the word "any amount paid or credited for use of land building furniture machinary" here the word used is any amount and not rent for current year hence amount received as advance rent will be liable for tds in the year of receipt. here in this regard one point is importent to note and that is that the person receiving rent will be elligible for tax credit of tds in the same proportion in which rent income will be offered for tax. for example if advane rent received is for 3 years on which tds is 30000 than person receiving rent will take tds credit using single tds certificte for all three years of rs 10000 each of three years. |
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Dear Harish if tds is deducted on advance amount how will he claim tax credit in the 3 years or so with single certificate when rent in next three years are less than the threshhold limit.. how will he show tds in the itr. moreover 26as will also not show tds in the next years.
harish sharma
(student)
(58 Points)
Replied 26 May 2010
| Originally posted by : ca.vijay singla | ||
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Originally posted by : harish sharma section 194I use the word "any amount paid or credited for use of land building furniture machinary" here the word used is any amount and not rent for current year hence amount received as advance rent will be liable for tds in the year of receipt. here in this regard one point is importent to note and that is that the person receiving rent will be elligible for tax credit of tds in the same proportion in which rent income will be offered for tax. for example if advane rent received is for 3 years on which tds is 30000 than person receiving rent will take tds credit using single tds certificte for all three years of rs 10000 each of three years. Dear Harish if tds is deducted on advance amount how will he claim tax credit in the 3 years or so with single certificate when rent in next three years are less than the threshhold limit.. how will he show tds in the itr. moreover 26as will also not show tds in the next years. |
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sir the threshhold limit is only for deductor and it has no impact on receipent.deductor will be free when he dedut tax in the year of payment and this will so even if receipent offer income in different years
he will treat it as an asset and credit it to p&l proportionatly and claim ta credit as per sec 199(iiia)
CAclubindia
