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TDS on rental income

P Gupta (practice) (75 Points)

10 March 2008

Is it true that

TDS is applicable ONLY if rent is more than 120000/- in a financial year irrespective of whether Lessee is a company or individual (Lessor is an individual in this case). For example, lessee, even if it is a company, 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).

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5 Replies

CA. Kirti S. Ganatra (Service) (1461 Points)
Replied 10 March 2008

This is question or answer

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Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 10 March 2008

SECTION 194-I. STATES AS UNDER Any person, not being an individual or a Hindu undivided family, who is responsible for paying to 48[a resident] any income by way of rent49, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, 50[deduct income-tax thereon at the rate of— 50a[(a) ten per cent for the use of any machinery or plant or equipment; (b) fifteen per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings where the payee is an individual or a Hindu undivided family; and (c) twenty per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings where the payee is a person other than an individual or a Hindu undivided family:]] Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed one hundred and twenty thousand rupees : 51[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section.] Explanation.—For the purposes of this section,— 52 [(i) “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,— (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee;] (ii) where any income is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.] THEREFORE YOUR OBSERVATION IS CORRECT

CA Shailesh +91 9393926464 (Chartered Accountant) (2088 Points)
Replied 11 March 2008

Absolutely true. No TDS liability

P Gupta (practice) (75 Points)
Replied 15 March 2008

Thanks a lot

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Originally posted by :P Gupta
"	Is it true that TDS is applicable ONLY if rent is more than 120000/- in a financial year irrespective of whether Lessee is a company or individual (Lessor is an individual in this case). For example, lessee, even if it is a company, 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).	"