Income Tax Act provides for TDS on collected Rent u/s. 194-I. Accordance with this section 194-I, any person any person (other than individual/HUF with turnover less than the limit specified in section 44AB in immediately preceding financial year), who is responsible for paying to a resident any income by way of rent is required to deduct tax at sources at the prescribed rates. Before 01.07.2010 the Limit of exemption for deducting TDS on collected Rent u/s. 194-I is Rs. 1,20,000/- and after this the Income Tax exceed exemption limit by Rs. 1,80,000/-.
Rates of TDS on Rental Payments:
Rates of TDS on Rental Payments:
- @ 2% for payment towards the use of any machinery or plant or equipment.
- @ 10% for the use of any land or building or furniture or fittings for all persons.
- @ 20% in all cases, if PAN is not quoted by the deductee with effect from 01-04-1010.
What is the provision for non-deduction of TDS on Rent?
Though the property is owned by two or more person then the income from such property shall not be assessed as income of association of person (AOP) exempted to deduct TDS u/s. 26 from tenant. Instead, the share of each such person in the income from the property shall be included in his total income, if the following condition are satisfied:
Though the property is owned by two or more person then the income from such property shall not be assessed as income of association of person (AOP) exempted to deduct TDS u/s. 26 from tenant. Instead, the share of each such person in the income from the property shall be included in his total income, if the following condition are satisfied:
- The property consists of buildings or buildings and land appurtenant thereto, and
- Respective shares of such persons are definite and ascertainable.
Clarification on non-deduction of TDS on Rent by CBDT:
Whether the limit of Rs, 120,000 per annum would apply separately for each co – owner of a property ?
Under section 194–I, the tax is deductible from payment by way of rent if such payment to the payee during the year is likely to be Rs. 120,000/- or more. If there are a number of payees, each having a definite and ascertainable share in the property, the limit of Rs. 120,000/- (Now Rs. 180,000/- per annum) will apply to each of the payees/co – owners separately. The Payers and payee are however, advised not to enter into sham agreements to avoid TDS provisions.”
Whether the limit of Rs, 120,000 per annum would apply separately for each co – owner of a property ?
Under section 194–I, the tax is deductible from payment by way of rent if such payment to the payee during the year is likely to be Rs. 120,000/- or more. If there are a number of payees, each having a definite and ascertainable share in the property, the limit of Rs. 120,000/- (Now Rs. 180,000/- per annum) will apply to each of the payees/co – owners separately. The Payers and payee are however, advised not to enter into sham agreements to avoid TDS provisions.”
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