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Tds u/s 194i (rent) ?

CA Prateek Garg (CA in Practice) (1447 Points)

22 May 2014

Mr X an individual run a business. during the year his business is liable for tax audit. he is also paying rent for his residential house which has nothing to do with his business. now my question is whether he is liable to deduct TDS on such rent...???

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11 Replies

Piyush Mittal (Article Assistant) (63 Points)
Replied 22 May 2014

No he is not liable to deduct TDs..

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HEM@NT G@RG (ARTICLE ASSISTANT) (313 Points)
Replied 22 May 2014

Hello Prateek,

In this case there is no liability of assesee to deduct TDS on rent as he paid rent of residential house which is not suppose expense of the business.

Ask if any query.

Rishabh Miglani (Audit Assisstant) (45 Points)
Replied 22 May 2014

Dear When we look at statutory provisions it is mandatory for an individual having tax audit to deduct the tdas on rent paid for personal purposes because in this case law does not make any differentiation that rent is being paid for personal or business purpose.

Rupesh Soni (Taxation Consultant & CA final student) (504 Points)
Replied 22 May 2014

No Need to deduct tds As its personap expenditure & debitd to Capital accc

Pooja Mundra (Article Assistant) (43 Points)
Replied 23 May 2014

TDS should be deducted.

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srinivasan (service) (898 Points)
Replied 23 May 2014

If one goes through the second proviso to sec 194I it is set clear to u derstand that it applies only for the books carried out business and not on personal ac. Further strength can be gained from clause ii of the explanation to the sec. Further if u see sec 44A A or AB it seeks the person to maintain the books for his business and not for his personal expenses. Therefore if the rent or any other exp. Paid on personal ac will not attract chapter xvii is tds or TCS provisions

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 23 May 2014

Hi Prateek ,

There are 3 issues in your question.

1) If you are worried about Mr X business income then Rent paid on residential house will be disallowed irrespective of whether tax audit is applicable or not or whether tds has been or has not been deducted. You can remove the thought of including it in business expense.

2) If you are worried about how Mr X can claim rent as deduction in his return then he cant as it will be application of income rather than an business expense in the hands of Mr X.

3) Whether TDS is to be deducted or not is totally different point because as residential rent is ab intio disallowable you need not bother about once again disallowance by way of Sec 40(a) . But if you dont deduct TDS then you shall be treated as assesse in default and will be liable for penalty.

But for TDS on residential property is matter of debate. As per practice TDS is not deducted but as per 194 I, it quotes 'Any building' so it doesnot make differenciation between Business or residential property.

Thus TDS can be deducted to be on the safer side. Or if it has not been deducted , then relaxation can be taken when the landlord has included this rental income in his return and paid tax on that.

Charudatta Kulkarni (Asst Manager) (130 Points)
Replied 23 May 2014

As per my opinion if an indivisual is paying rent to indivisual, TDS deduction is out of question.But since he is liable for Tax Audit, Mr. X is staying in residential house in indivisual capacity. As per provisions of act, any amount paid which is purely personal nature is out of scope for TDS even if indivisual or HUF is liable for Tax Audit.