TDS on Rent

[d.v. gupta]

we are a pvt ltd co. we are paying rent to a director of company for two immovable property used by company as under: rent for first property rs. 6000 rent for second property Rs. 5000 thus we are paying rs 11000 in toal. whether the company should deduct tds or not out of rent paid for two property.

[DEV KUMAR KOTHARI]

see S. 194 I, you will find answer. A person who rais query must come with clear and analytical facts.Your facts are not complete and clear, therefore, one has to take some presumptions. The query raiser must alos send his result of own study and working and then seek views of otehrs. Coming to your query. as the payment and / or credit to a particular person (land lord) will exced Rs.1,20,000/- (11000 X 12 =132000) in a previous year, exemption vide proviso to S. 194 -I is not applicable. In initial year of tenancy if started late and total rent payable in that year is not exceeding Rs.120K than in that year tax need not be deducted. If Rs.132000 includes reimbursement for municipal tax, and after deduction rental income does not exceed 120K, then also tax need nto be deducted. Similarly if tenancy is terminabe on notice, one can take view that tenancy can be terminated any time, so TDS need not be deducted during initial months till the amount does not cross Rs.120K, however, in that case TDS on entire amount (including for earlier months will have to be deducted. But be ready, the A.O. may dispute this stand and ask to pay interest because the landlord is a director of company (tax deductor). However, if the tenant has given notice to quit and the rent payable for the period during tenancy is less than 120K in the previous year, then tax need nto be dedicted. so ther can be several situations of no TDS. The landlord can obtain certificate for no TDS or lower TDS from his A.O. So now you msut have suffecient material for thinking and planning. Come again to this forum with your solutions for benefit of readers.

[Surender Gupta]

Since the amount is exceeding Rs. 1,20,000/- the company is required to deduct TDS.

AI Summary

TDS on rent: deduction required where annual rent to same payee exceeds threshold; limited exceptions and certificate remedies. TDS under s. 194I must be deducted where cumulative rent to the same payee in a previous year exceeds the annual threshold; exceptions include an initial year with total rent below the threshold, reimbursements excluded from rent, tenancy terminable on notice (subject to challenge), and availability of a certificate from the assessing officer for no or lower deduction.