Hi,
We are a company paying rent to different parties. U/s. 194 I specifically says that if the Rent paid is more than Rs.1.20 L per annum then the tax should be deducted.
We are paying Rent to some different parties.
Name of the payee Category Rent TDS status
Mr. X Residential Bungalow (for HO) Least Rent Rs.1 L Deducted
Mr. Y Guest House Monthly Rent Rs.10,000 Not deducted
Flat Owners Welfare Association Residential Apartment (for Branch) Monthly Rent Rs.10,000 Not deducted
Mr. Z Lunch Room – I Monthly Rent Rs.4,500 Not deducted
Mr. A Lunch Room –II Monthly Rent Rs.4,500 Not deducted
With reference to the www.taxworry.com website, Rent paid should be taken as an AGGREGATE BASIS. So, I brought to the attention of my auditor (as I’m the internal audit assistant), but he is explaining that the Rent paid is not more than Rs.1.20 L p.a. to an individual AND it should NOT be taken as AGGREGATE BASIS. So the TDS not to be deducted. What about Flat Owners’ Association case? Is it liable to TDS?
Experts’ opinion pl.
10 Replies
Nitesh
(Chartered Accountant)
(340 Points)
Replied 20 August 2007
Your auditor is correct, the limit is based on individual and not aggregate of all.
Late CA Sampat Jain
(Chartered Accountant)
(4772 Points)
Replied 20 August 2007
Section 194I speaks of rent paid to resident....as such applicable both for Ind and Association etc .If rent paid to association does not exceed 1,20,000/- , no TDS is required . Hence NO WORRY . Your Taxworry in this respect is unfounded.
Section 194I , reads as follows:
194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for
____________________________________
paying to [a resident] any income by way of
_____________________________________
rent, 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 :
[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.]
YOUR AUDITOR IS CORRECT.........TAXWORRY HAS UNNECESSARILY WORIED YOU
Section 194I , reads as follows:
194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for
____________________________________
paying to [a resident] any income by way of
_____________________________________
rent, 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 :
[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.]
YOUR AUDITOR IS CORRECT.........TAXWORRY HAS UNNECESSARILY WORIED YOU
(Guest)
I do not know which answer Sri Krishnan is referring.
I had posted this
" If a residence has co-owners, can the rent be split up for determining the applicability of tax.?
No, rent on the property shall be subject to TDS without split up.That is the payer will deduct the tax at source on gross amount of rent without dividing the rent on different owners."
taxworry tries to make people's life worry free .
If really any mistake is committed, it should be brought to notice of taxworry through comment or on email taxquery at gmail dot com
RamaKrishnan
(Student )
(120 Points)
Replied 23 August 2007
Dear Taxworry (Guest)
Thank you for your interest to try to clarrification.
I refered taxworry for the above mentioned Query.
The URL is as follows:
https://www.taxworry.com/2007/04/is-rental-of-two-types-of-equipments.html
Pl. read the Last Paragraph again...again...& again
Your Expert opinion pl.
Thank you for your interest to try to clarrification.
I refered taxworry for the above mentioned Query.
The URL is as follows:
https://www.taxworry.com/2007/04/is-rental-of-two-types-of-equipments.html
Pl. read the Last Paragraph again...again...& again
Your Expert opinion pl.
(Guest)
I feel you have not understood the context in which I answered the query you have read. I thought the the question was regarding composite rent like somebody renting the house along with furniture and fixture. As it happens , one is making the arrangements of payment to two persons - one for renting premises and one for furniture and fixture.
Read Circular No 715 dt 8/8/1995 states in question no 24 given as under
Question 24 : Whether in a case of composite arrangement for user of premises and provision of manpower for which consideration is paid as a specified percentage of turnover, section 194-I of the Act would be attracted ?
Answer : If the composite arrangement is in essence the agreement for taking premises on rent, the tax will be deducted under section 194-I from payments thereof.
Therefore, what is the rental agreement is very fundamental to your question.
In the answer I emphasized that whether TDS is to be deducted while making payments , distinction is not on types of equipments , on rental income and not types of plant or equipments.
Give attention to Explanation words"separately or together"
Explanation
(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,
Anyway It is law and every one has his right of interpretation.
taxworry
Note: If facts are that furniture is rented by somebody else and separate rental agreement are there, then Rs, 1,20,000 will be counted separately.
suman nvss y
(article assitant)
(147 Points)
Replied 07 January 2008
NO DEDUCTION SHALL BE AMDE UNDER THIS SECTION WHERE THE AMOUNT OF SUCH INCOME OR AS THE CASE AMY 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 PERSONS TO THE ACOUNT OF OR TO THE PAYEE DEOST NOT EXCEEDS ONE HINDERED AND TWENTY THOUSAND RUPEES. SO YOU NEED NOT DEDUCT TDS ON AMOUNT PAID TO OWNERS ASSICIATION
kalyana raman s
(Sr manager finance)
(21 Points)
Replied 30 June 2008
I would like to know the income tax provisions for the Association.
1.Payments made by the Assoiciation is subject to deduction of TDS
2. if it is flat owners association whether the income tax returns to be filed.
please clarrify.
thanks,
Nasim
(Service)
(21 Points)
Replied 14 July 2008
Pls. letus know what are the rates of Service Tax for the following year
1997, 1998, 1999, 2000, 2001, 2002, 2003 and 2004
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