TaxTMI 
TaxTMI 
Rent Income
08 Sep 2010 
1 Reply 
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Tax Deduction at Source obligations require tenants to deduct TDS on rent unless service tax is separately shown.
The tenant must generally deduct TDS under section 194I on the amount paid to the landlord; if service tax is not shown separately or is known, TDS is to be deducted on the full payment. To enable correct TDS treatment, the landlord should issue a rent bill segregating rent and service tax, applying reverse charge where applicable, allowing the tenant to compute TDS on rent net of the service tax component. Service tax allocation can be computed by gross multiplied by 10.3 divided by 110.3. (AI Summary)
The tenant must generally deduct TDS under section 194I on the amount paid to the landlord; if service tax is not shown separately or is known, TDS is to be deducted on the full payment. To enable correct TDS treatment, the landlord should issue a rent bill segregating rent and service tax, applying reverse charge where applicable, allowing the tenant to compute TDS on rent net of the service tax component. Service tax allocation can be computed by gross multiplied by 10.3 divided by 110.3. (AI Summary)
The agreement was earlier that the lessee shall pay rent plus service tax. Service tax has been deposited by landlord. Now the lessee says that he will pay only rent and the service tax shall be borne by the landlord. For the purpose of rent income, the rent income will be rent received by landlord minus the service tax deposited by him or the gross rent received.