RATE OF TAX DEDUCTED AT SOURCE ON EXHIBITION SPACE

[SURYAKANT MITHBAVKAR]

We have particiapate in exhibition but while making payment for Stall Rent to exhibitors what rate of TDS to be deducted as per Income Tax Act. Whether itis @2% or 10%

Pl. advise.

[CAGOPALJI AGRAWAL]

It should be 10% since would be covered under rent.

[MUKESH SHAH]

Dear friend,

 Sec 194I provided as under:

194I - Rent

[Rent.

194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to ⁸⁶[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 at the rate of—

[(a)  two per cent for the use of any machinery or plant or equipment; and

(b)  ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings:]]

Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed [one hundred and eighty thousand rupees] :

Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section.]

Explanation.—For the purposes of this section,—

[(i)  "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,—

(a)  land; or

(b)  building (including factory building); or

(c)  land appurtenant to a building (including factory building); or

(d)  machinery; or

(e)  plant; or

(f)  equipment; or

(g)  furniture; or

(h)  fittings,

whether or not any or all of the above are owned by the payee;]

(ii)  where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

The highlighted lines are most important and more relevant.

 

The exhibitor sub-lets space to the participant for a consideration for use of the respective booked space under arrangement.

 

Even, CII site also specifies as a part of general terms and conditions applicable to participant as under:

 

10. TDS: As per Income Tax Act, underSec.194(I), TDS is not applicable if the aggregate amount of rent paid or credit does not exceed Rs.1,80,000 during financial year. Please discuss with CII official coordinating with you before any TDS deduction. Exhibitor in their covering letter along with the payment and space booking form must clearly mention the details about TDS amount & percentage deducted.

 

The cumulative reading of the above, it can be inferred that the above payment would get covered u/s 194I rather more than u/s 194C.                                                             

[Guest]

DEAR STUDENT

YOU HAVE TO DEDUCT TDS U/S 194I AT THE RATE OF

2% U/S 194I(a) WHERE RENT PAID FOR THE USE OF ANY PLANT AND MACHINARY OR ANY EQU

OR 10% U/S 194I(b) WHERE RENT PAID FOR THE USE OF ANY BUILDING FURNITURE

AI Summary

TDS on rent applies to exhibition stall payments; withholding rate varies by use of equipment or building. Payments by a participant to an exhibitor for use of booked stall space are to be treated as rent for withholding purposes and attract TDS at differing rates depending on whether the payment is for use of machinery/plant/equipment or for use of land, building, furniture or fittings. Deduction obligation arises on credit or payment, subject to the monetary threshold below which no TDS is required; individuals and HUFs deduct only if their business turnover exceeds the applicable audit/turnover threshold. Exhibitor sub-letting falls within the rent definition and organiser terms may require TDS reporting.