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Urgent query related to tds

Shaily Jain (Chartered Accountants) (1054 Points)

03 April 2012

hi frnds,

Pl give your openion and suggestion as per act on the following:-

A company pay rent for its branch office on which it deduct the TDS. The company also pay rent for generator and tower for the same building which is only in the nature of maintenace. The owner of office, generator and tower are different. But the company pay whole amount to landlord of office and office landlord pay same amount to owner of genartor and tower so it can also be called reimbursement only. My query is wherther co also should deduct TDS for generator and tower.

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9 Replies

Aswadh Kota Ragala (CA) (85 Points)
Replied 03 April 2012

As per sec194I, tds shall be applicable @ 2% for rent of Genarator &Tower but exclusive of Service Tax, if any, party is charging

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Aswadh Kota Ragala (CA) (85 Points)
Replied 03 April 2012

and wait for experts opinions also

Shaily Jain (Chartered Accountants) (1054 Points)
Replied 03 April 2012

but its a kind of remibursement. and also its writen in rent agreement so still it will cover under 194C?

Ramil (CA,L.L.B.) (Taxation) (147 Points)
Replied 03 April 2012

Dear Shailey,

At first , Lease/rent agreement is to be reviewed. If your lease agreement clearly specifies that rent shall be paid for the entire office building(including the generator etc) and for generator and tower, the maintenance charges shall be paid then NO TDS applicablilty comes.

Since as per Sec 194 I, TDS on plant machinery is to be deducted if it has been taken on lease.

If lease agreement specifies that tower and generator is also taken on lease and for this company shall pay this much rent then TDS applicability comes (2%).

But as in your question, it is mentioned that rent is paid which is in nature of maintenance charges so on this amount No tds is to be deducted.

So Please go through the agreement and understand the terms. IF terms clearly sepcify the payment of rent for generator and tower then deduct TDS(2%) if it specifies the payment of Maintenacne charges or rent in nature of maintenance charges then no TDS to be deducted.

BHUMIKA GULATI (n.a) (26 Points)
Replied 03 April 2012

According to Section 194 I, Deduction of taxv At source from income by way of Rent.

The Term Rent is Defined in Section 194I

Rent is also Inculde

1.land

2.Building

3.Machinery

4.Plant

5.Equipment

6.Furniture

And Generatoris a Part of Plant and machinery and tower is a part of Building

Therefore the Company has to deduct the tds.

The rate of TDS on generator should be Equal to 10% and Rate of Tds on Tower should be 15% or 20% depending upon the Recipient. {If Recipient is an individual or HUF Then 15 % or if Recipent is any otjher person then 20%}

Yes the Company has to deduct TDS on Geneartor and Tower.

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Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8311 Points)
Replied 03 April 2012

As per my knowledge,

If in the agreement it is stated that office building only and there is nothing mentioned regarding the generator and tower then TDS will not be payable by the Company.

i.e in case of a sub contract TDS is not mandatory but if the company has made an agreement with the tower owner and generator owner regarding the use then company will be liable to deduct TDS .