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TDS Rent & Maintenance

Nitin Jogad (Audit & Assurance) (52 Points)

12 January 2010

Hi Everyone

I have a question,I am a trainee and i have come across a rent agreement which is as follows :

Rent 1,00,000 pm to the landlord

Maintenance charges : 20000 per quarter to the buliding association

The rent agreement states that the lessee is responsible for the payment of maintenance charges directly to the building association .

so I am struck , on what maintenace amount the tds to be deducted and under wat i.e under 194I or 194C , if under 194I then it doesn't exceed the basic limit of Rs.120000

Pls help me and provide me with the related Income tax circulars , case laws ,or provisions.

Thanks in advance

Warm regards

Nitin

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6 Replies

Amir (Learner) (4016 Points)
Replied 12 January 2010

Deaqr Nitin,

TDS on maintenance charges has to be deducted u/s 194 C in the present case...Simply because:-

1) Receipent is different..(Assoxciation & Landlord)

2) It is a different agreement altogether...

The fact that in the rent agreement it is mentioned that maintenance charges shall be paid by tenant is just for the sake of fixing the liability on the tenant...

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CA CS Amit Borade (Chief Accountant) (2828 Points)
Replied 12 January 2010

Since it is directly paid to Building association, so it is not part of rent &therefore 194 C is applicable

Nitin Jogad (Audit & Assurance) (52 Points)
Replied 12 January 2010

I thank you for ur reply it will be of great help , can you do me one more favour can you say me the circular no. or any case or provisions relating to it as I have to provide explnation to my boss.

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Nitin,

Dept. doesnot issue circular on every aspect...

These 2 contracts are separate..

U ask a simple thing from ur boss that suppose if tommorow the tenant employed the landlord then TDS on his salary would be deducted as per 192 or 194 I

Divya K S (CA) (289 Points)
Replied 12 January 2010

Hi Nitin,

As said by others, maintenance charges is taxable u/s 194C & not 194I since it does not form part of rental charges & its not paid to the landlord towards rent. Also the payment exceeds Rs. 50,000 p.a, i.e 20000*4. Hence tax must be deducted u/s 194C.