TDS ON RENT SECTION 194I NOTES CASE CIRCULARS NOTIFICATION

SHARE:

Purview of Section 194I (TDS on RENT)

The person (not being individual or HUF) who is responsible for paying any income to a resident by way of rent is liable to deduct tax at source in case 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 exceeds Rs. 1,20,000/-. Individuals and/ or HUFs who are subject to tax audit are also under obligation to deduct the tax at source [w.e.f. 1.6.1994]. The limit of Rs. 1,20,000/- has been enhanced to Rs. 1,80,000/- w.e.f. 1.7.2010 

Meaning of the word ‘Rent’ 

‘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 of or all of the above are owned by the payee Explanation (i)to Section 194I.Subletting is also covered.

In case the landlord collects security or advance payment at the time of letting out a building to a tenant on the condition that the deposit will be refunded at the time of vacating the building, such a receipt is not in the nature of income and therefore no tax is to be deducted at source u/s 194I. 

However advance rent (not in the nature of refundable) paid is subject to tax deduction.Moreover where any such rent is credited to ‘Suspense Account’ or to any other account shall also be liable to deduct tax at source.

Persons liable to deduct tax at source 

Any person not being an individual or a H.U.F. who is responsible for paying to a resident any income by way of rent is liable to deduct tax at source as and when aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year exceeds Rs. 1,80,000/-. Individual or H.U.F.s who were subject to tax audit under Section 44AB during the financial year immediately preceding the financial year in which such rent is paid or credited are also liable to deduct tax at source.

Time of deduction and Rate 

At the time of credit of such income to the account of the payee or at the time of payment thereof in cash/ cheque etc. whichever is earlier. Tax is to be deducted at  source at the rates mentioned here-under (w.e.f. 1.10.2009):  


  • (i) For renting of land, building, furniture & fittings :The rate of deduction is 10% 
  • (ii) For hiring of machinery, plant or equipments    :The rate of deduction is 2% 
No cess to be added.Flat rate of 10% /2 % is to be deducted.

Citation of Circulars/ Case Laws 

(1) Departmental Clarifications regarding advance rent etc. 

CBDT has clarified that:

(a) Where tax is deducted on advance rent spread over more than one year, credit shall be allowed in the same proportion in which such income is offered for taxation for different assessment years based on the single certificate furnished for tax so deducted on the entire advance rent. 

(b) Where

  • rent gets terminated/ cancelled resulting in refund of balance amount of advance rent to the tenant, or
  • the rented property is transferred by way of sale, lease, gift etc. with the tenant in occupation or otherwise resulting in refund of balance of advance rent to the transferee or the tenant, 
credit for the entire balance of tax deducted at source, which has not been given credit so far, shall be allowed in the assessment year relevant to the financial year during which the rent agreement gets terminated/ cancelled or rented property is transferred and balance of the advance rent is refunded to the transferee or the tenant as the case may be.  
[Circular No. 5/2001 dated 2.3.2001]. 

(2) Municipal Taxes and Ground Rent borne by the tenant
Where Municipal Taxes, Ground Rent etc. are borne by the tenant, no tax will be deducted at source on such payments. 

[Circular No. 718 dated 22.8.1995 (215 ITR (St) 68)] 

(3) Subletting of Land 
Where a person has taken a particular space on rent and thereafter sublets the same fully or in part for putting up a hoarding, he would be liable to deduct TDS u/s 194I and not u/s 194C.

[Circular No. 715 dated 8.8.1995 (215 ITR. (St) 13)] 

(4) Hotel accommodation taken on regular basis 
Where payments made by persons other than individuals and H.U.F. (not covered by section 44AB) for hotel accommodation taken on regular basis will be in the nature of rent subject to TDS. 

[Circular No. 715 dated 8.8.1995 (215 ITR (St) 13] 

(5) Warehousing Charges considered as rent
Warehousing Charges are subject to TDS.

[Circular No. 718 dated 22.8.1995 (215 ITR (St) 68] 

(6) Rent paid to Government etc. whose income is exempt under section 10(20) or 10(20A) 

Rent paid to Government or Local Authorities and statutory Bodies whose income is exempt u/s 10 (20) and 10 (20 A) is outside the purview of TDS

[Circular No. 699 dated 30.1.1995] 

(7) Rental income assessable as Business Income

Rent from leasing out a factory building though assessable as business income, will be liable to deduct at source u/s 194-I. 

[F.N.275/108/95-IT (B) dated 27.2.1997] 

(8) Property owned by co-owners

Tax is deductible from payment by way of rent, if such payment to the payee during the year is likely to be Rs. 1,20,000/- or more. If there are more than one payees, each having a definite and ascertainable share in the property, the limit of Rs. 1,20,000/- will apply to each of the payee/ co-owners separately. The payers and  payee are, however, advised not to enter in to shame agreement to avoid TDS provisions.The Limit of  Rs. 120000/- has been increased to Rs 1,80,000 wef 01.07.2010

[Circular No. 715 dated 8th August, 1995] 

(9) Deposit given to Landlord – notional interest not to be considered :In response to a query whether rent paid should be enhanced for notional income in respect of Deposit given to the landlord, CBDT has clarified that the tax is to be deducted from actual payment and there is no need for computing notional income in respect of a deposit given to the landlord. If the deposit is adjustable against  future rent, the deposit is in the nature of advance rent subject to TDS. 

[Circular No. 715 dated 8.8.1995] 


10. TDS is not applicable on  Service Tax on rent :TDS on service Tax on rent is not applicable .


[Circular No. 04/2008 dated 24.04.2008] 

11.Section 194-I Shall not  cooling charges paid by the various customers to the owners of cold storages.

Read more: http://www.simpletaxindia.net/2008/01/tds-on-cold-storage-rent-194c-or-194-i.html#ixzz1x4Ax63dX

[Circular No. 01/2008 dated 10.01.2008] 

12.SECTION 194-I TDS ON RENT PAYEE MUST HAVE CONTROL OVER ASSET:

[ Chattisgarh State Electricity Board vs. ITO (ITAT Mumbai) ]

Read more: http://www.simpletaxindia.net/search/label/SEC%20194%20I#ixzz1x4Bar3KU

13. TDS on Taxi Charges u/s 194 I is applicable if user has control over Taxi: It is depended on contract details. Few point has been discussed in link here 

14. composite arrangement under franchises agreement not liable for TDS as rent :Delhi High court .  CIT v NIIT Ltd. (Taxpayer) [2009-TIOL-533-HC-DEL-IT],
Read more: http://www.simpletaxindia.net/2009/12/tds-on-rent-composite-arrangement.html#ixzz1x4KoBFpv

COMMENTS

BLOGGER: 9
Loading...

$show=index

Name

. SECURITIES (MNP) (TDS)2007-08 ` 01.07.12 01.09.2008 01.10.2012 06.07.2009 07.08.2012 1 PERCENT EXCISE ITEMS LIST 1 sep 1% excise 10 year nsc 10(10C) 1000 court cases judgements supplied to ITO 1000 rupee note 11-2008 11-2010 130 items 14.08.2008 15 august 150 Rs coin 15g 15h 18-12-2009 192(1A) 192A 194 I 194A 194c from 01.10.2009 194H 194j 194LC 1981-2007 2% cst 2% excise 2004 2008 2008-09 FY 2010 206AA 234A 234B 234C 234c interest calculator 234E 23AC 23ACA 23B 24C 24q annexure II 25 paisa coin 271(1)(c) 271B 271H 272B 27A 280 280 challan 281 282 283 29 AUGUST 29.04.2010. 29/08/2008 29/2008 service tax 2g meaning use 3 idiots 30 MARCH 31st March 32-2010 33 of 2009 35(2AA) 35(2AB) 3CD 3g meaning use 40(b) 43B 44 AB EXEMPTED INCOME 44AA 44AB AGRICULTURE 44AB new limit 44AB NON RESIDENT 44ad 46/2012 45/2012 49C 5 day week 5 years post office deposit 5/2011 50 paisa coin 54b 54EC 54ee 54f 54gb 5th paycommission punjab 6 % excise 6 crore advance limit 6/2005 69/2010 6th cpc 6TH PAY COMMISSION 70% of pan etds 7th Central Pay Commission 8 tips to save tax 80C 80ccc 80CCD 80cce 80CCF 80CCG 80d 80DDB 80EE 80G 80GG 80GGA 80GGB 80ggc 80tta 80U 85% of pan etds 86/2008 DATED 13-08-2008 87A rebate 89(1) 89(1) relief calculator 9.5 % rate for private epf 92E 95% of pan etds 98 dated 04/01/08 aadhaar aakash tablet aam admi aar Aayakar Sampark Kendra abatement abolished ACCOUNT PAYEE DRAFT Accounting ACCOUNTING CODE accounting code for services ACCOUNTING FOR GOVT GRANTS accounting standards ACES ADD IN Add-Ins additional relief in budget 2010 adjustment of advance FBT with advance Tax advance rullings advance salary ADVANCE TAX CALCULATOR advance tax challan ADVANCE TAX CUT OFF AMOUNT ADVANCE TAX DATES AFFIDAVIT AG Projects Technologies Ltd RT age 80 addition pension aibea wage revision aibea wage revision latest news aiboa aiboc aiboc wage revision AIG AIR airline ticket booking tds airlines all is well allowances allownces alphabet of inspiration alteration on check allowed alternate minimum tax AMENDED 3CD amendment in companies bill 2011 amendment in gratuity act 2010 amendment in registration service tax AMENDMENT IN SERVICE TAX ON RENT amendment to finance Bill 2010 AMNESTY SCHEME 2007 amt Anna Hazare anna hazzare bill vs govt lokpal bill appeal apply for new pan card against old pan card aqb arbitration arrears of salary arrears of sixth pay ARRERS TAX AS-12 ASBA assessee in default ASSESSMENT REOPENING ASSESSMENT YEAR 2008-09 REFUND atm atm 100 per day atm cash without card atm tips atm wrong debit audit cases itr filing audit limit enhanced Audit Questionaire AUDIT REPORT AUS VS IND.INDIA VS SL Automated teller machine AUTOMATION OF CENTRAL EXCISE AND SERVICE TAX ay 2010-11 bad debts Bank Bank account bank audit bank audit 2012 bank charges BANK SALARY bank strike 06/07/09 and 07/07/09 banking law amendment banknotes banks npa provisioning BARE ACT bare rules BASE RATE BY BANKS bcct BIMAL JAIN biometric pan card black and white form not acceptable black money BLOCK PERIOD blogging bobay refund BONUS bonus share book discount BOOK ON EFILING BOOK REVIEW books of accounts BOOMING INDIAN ECONOMY both House rent allowance both hra and house loan Brass Scrap BRIBE CASE BROKER BSE bsnl broadband bsnl broadband usage bsnl land line sms alert BSR CODES BUDGET 2009 budget 2010 budget 2010-11 budget 2011 BUDGET 2012 budget 2013 BUDGET 2014 BUDGET 2014 CONTEST budget expectations BUDGET HIGHLIGHTS budget live on computer budget live telecast budget notification budget on tv budget speech BUDGET SPEECH DOWNLOAD Budget-2014 Budget-2015 BUDGET-2016 BUDGET08 Business BUSINESS AND PROFESSION MEANING BUSINESS COVERED UNDER 44ab BUY HOUSE C FORM CA CAN ONLY AUDIT MVAT CA CLUB INDIA CA GIRISH AHUJA CA NITIN GUPTA CA PARDEEP JAIN CA ROHIT GUPTA ca services CA sudhir Halakhandi CA Swapnil Munot CA Vikas Khandelwal calculate arrear CALCULATE NEW PAY calculate your emi calculation of tax on salary arrears CALCULATOR CALCULATOR REVISED capital asset capital formation huf Capital gain capital gain account scheme 1988 CAPITAL GAIN INDEX capital gain on repayment of loan capital gain on tenancy rights capital goods capital revenue CAPITAL SUBSIDY CAR LOAN RATE INCREASE carry forward of losses in late return cas cash flow statement CASH PAYMENT DIS ALLOWANCE CASH PAYMENTS EXCEEDING 20000 CASH SUBSIDY cbdt cbec CBI ARRESTED centeral sales tax rate CENTRAL PAY COMMISSION CENTRAL PROCESSING CENTER CENTRALISED PROCESSING OF RETURNS Cenvat CENVAT Credit Rules cgas 1988 challan challan 281 CHALLAN 289 challan correction challan Form 17 CHALLAN STATUS INQUIRY change change in cst rate change in excise duty rates CHANGE IN PAN ADDRESS CHANGE IN PAN DATA change in tds rates in budget changes CHANGES IN SERVICE TAX ACT changes in new itr forms CHANGES IN TDS CHARGES ON CASH PAYMENT OF CREDIT CARD BILL charitable organisation check name from PAN check tds deducted online Cheque cheque bounce cheque payment before due date cheque tender date /realisation date Cheque Truncation CHEQUE VALIDITY child care leave CHILD DEPENDENT PREMIUM CHILD MARRIED PREMIUM child plan childeren name children education allownces chip based atm card cibil cibil for companies CII 2007-08 CII 2008-09 CII 2010 cii 2012-13 CII2011-12 cin CIRCULAR 3/2010 DT 2.03.2010 CIRCULAR 8-2010 CIT v. Emilio Ruiz Berdejo (2010) 320 ITR 190 (Bom.) cloning of atm card clubbing of income COLLECTION CHARGES COLOR SCHEME COMMISSION ON SMALL SAVINGS common error in 2009-10 common error in itr 4-5-6 compa companies bill 2012 COMPANIES RATE COMPANY BILL 2011 company deposit Company Law Settlement Scheme COMPANY REGISTRATION complusory payment of taxes Composition scheme service tax COMPUTER AS FAX MACHINE computer sytem at ito office CONCEPT PAPER configure yahoo mail in outlook express consolidate account statement construction purchase of house Consultancy Service Consumer Price Index continues services CONTRIBUTION TO NEW PENSION SCHEME CONTRIBUTORY PENSION FUND CONVERT FIGURES INTO WORD EXCEL COPARCENER CorpMcash corporation bank correction etds CORRECTION IN PAN DATA correction in section CORRECTION RETURN CORRECTION RETURN.ETDS cost accounting cost audit cost inflation index cost inflation index 2012-13 COST INFLATION INDEX FY 2010-11 COST INFLATION INDEX FY 2011-12 COST OF INDEXATION CALCULATOR court case in entry tax punjab cpc phone number cpf Credit card CREDIT CARD BILL PAYMENT ICICI BANK credit scores cricket team critical illness CROSSED DEMAND DRAFT CRR crr reducred CS DIVESH GOYAL CST CST 3% OR 2 % cst act 1956 cst form CST FORM STATUS cst rate changed CST REDUCE RATE ctt currency CURRENCY TRADING ILLEGAL custom custom changes in budget cusual leave DA MERGE da rate da rate 01.07.2012 da rate january 2013 da rate july 2012 da rate wef 01.01.2012 date extension DDO ASK RENT RECIPT ddt dearness allowance Debit card DEBT EQUITY RATIO debt funds debt trap declared goods DEDUCTION 80C deduction for higher studies deduction on saving bank interst deduction u/s 80DD Deemed income of employee deemed services defective return defence officers defence pay defence pay scales DELAY IN FILING delete ledger in tally DELHI HIGH COURT demat deposit tax of two quarter in single challan depreciation depreciation on car depreciation on commercial vehicle. DEPRECIATION ON INTANGIBLE ASSETS depreciation rate depreciation rate 2009-10 DETAIL AFTER E FILLING DETAIL OF TIN Determination of value DIFFRENT TYPE OF TAXES digital signature din direct payment in bank account DIRECT SUBSIDY direct tax bill direct tax changes in budget direct tax code direct tax code 2009 Disability insurance discussion Paper distribution of salary dividend distribution tax dividend striping dnd do not call. document identification number document ientification number documents required for service tax registration domestic transfer pricing donation dot double taxation dow jones download download 89(1) relief calculator download direct tax code 2012 download form 16A download fvu download idfc INFRA BONDS FORM draft reply drawback rates dtaa dtc DUE DATE AY 2010-11 due date ay 2011-12 due date extended due date extended to 31.08.2012. due date for service tax return due date form 16 due date form 16a due date June due date march tax due date of return 2008-09 due date pf esi due date to deposit tds DUE DATES DUE DATES CALENDAR DUE DATES CALENDER DUE DATES INCOME TAX DUE DATES SERVICE TAX DUE FAMILY PENSION DULICATE PAN DUPLICATE TAN dvat e book Income Tax rules e book on service tax E ERA OF TAXES e filing do and don'ts e filing of audit report e filing processing status e filing software excel free e filing through evc e filing utilities e mode for notice to shareholder e notice to share holder e payment of epf E PAYMENT OF EXCISE DUTY e payment of income tax E PAYMENT OF SERVICE TAX e payment of tds E STAMP DUTY e tutorial for TAN registration E-1 FORM E-1 SALE e-commerce E-FILE SERVICE TAX RETURN e-Intermediary e-payment from friends account E-PAYMENT OF SERVICE TAX e-payment of taxes E-SEVA BY ICAI e-TDS/TCS statements earn from home earned leave Easy Exit Scheme ebay EBOOK EBOOK ON SERVICE TAX economic survey economic survey 2010 economic survey 2011 economic survey 2012 Edible Oils EDITABLE INCOME TAX FORM education cess EDUCATION LOAN eet EFFECTIVE DATE CST RATE REDUCTION effective date of allowncs efiling errors efiling free efiling income tax return efiling of excise return efiling registration problem Electricity act ELECTRONIC FOREX TRADING Electronic Verification Code (EVC) elegent card on holi ELSS EMANAGEMENT OF TAXES EMI CALCULATOR empanelment as branch auditor EMPLOYEE PROVIDENT FUND employee state insurance employee state insurance act 1948 employee state insurance act Limit employer e sewa eMudhra Consumer Services entries r off in 50 paisa entries rounded off in rs ENTRY TA