TDS FOR ARREARS OF RENT

[DR.MARIAPPAN GOVINDARAJAN]

The monthly rent of a premises is ₹ 20,000/- . Since the total rent for the year is ₹ 2,40,000/- tax is liable to be deducted at source.

The agreement to enhance the rent with retrospective effect from 01.01.2015. Therefore the arrears of rent is to be paid.

Whether the tax is to be deducted for the current financial year ₹ 240000/- or including the arrears to be given from 01.01.2015 to 31.10.2016?

Please advise.

[Ganeshan Kalyani]

Sec. 194I - 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, deduct income-tax thereon .

In view of above provision , the tds shall be deducted on the rent amount including arrears received in the current period. the threshold limit includes arrears in addtion to rent amount . thanks.

[DR.MARIAPPAN GOVINDARAJAN]

Whether the provisions of 10(E) is applicable in this case?

[Ganeshan Kalyani]

The relief u/s 89 is applicable in case of past arrear salary received in the current year. to claim this benefit assessee has to file Form 10E. but the query pertains to Rental income. hence in my view the provision of section 89 where form 10E need to be filed to claim relief is not applicable in this case .

AI Summary

TDS on rent arrears: include retrospective arrears when assessing threshold and deduct tax at credit or payment. TDS on rent is required at the earlier of credit or payment and includes retrospective arrears paid in the current period; therefore the payer must include arrears when determining the threshold and deducting tax. Relief provisions designed for past salary arrears are not applicable to rental income and cannot be used to avoid deduction on rent arrears.