Deduct 5% TDS on Payment of Rent over Rs. 50000 a Month - Budget-17

Budget 2017: Paying rent over Rs 50,000 a month? Get ready to deduct 5% TDS

Individuals and HUFs paying rent of Rs 50,000 or more per month will now have to deduct 5% tax at source i.e TDS at the rate of 5%, as per Budget 2017 proposals. This move is aimed at ensuring that recipients of large rental incomes come into the tax net as they would be forced to report the full rental income in their tax returns in order to claim benefit of the TDS amount. This change is proposed to be made effective from 1.6.2017.

The existing provisions of section 194-I of the Act provide for TDS at the time of credit or payment of rent to the payee beyond a threshold limit. Currently, this provision is applicable to Individuals or Hindu undivided family (HUF) which is liable for tax audit under section 44AB.

However, Individuals and HUF other than those liable for tax audit were not liable to deduct tax at source under this section i.e. section 194-I of the Act. In order to widen the scope of tax deduction at source, it is proposed to insert a new section 194-I B in the Act to provide that Individuals or an HUF (other than those covered under 44AB of the Act), paying to a resident, rent of over Rs 50,000 per month, shall deduct tax at source of 5%.

However, to make this rule tax -payer friendly and easy to comply with, it is proposed that the payer need not obtain a TAN and is required to deduct the tax only once in a financial year.

It is proposed that tax shall be deducted at the time of credit of rent, for the last month of the financial year or the last month of tenancy if the property is vacated during the year to the account of the payee.

Source: The Economic Times

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All about TDS on Rent u/s. 194-I - FAQs

1. What are the provisions relating to TDS on rent? From which date same are applicable?

   As per the Finance Act, 1994 the provisions of TDS on rent have been introduced w.e.f. 1.6.1994. The salient feature of Sec. 194-I are as under:-

i)   The provisions are applicable only in cases where the person making the payment of rent is an individual or HUF who is required to get his accounts audited u/s 44AB in the immediately preceding financial year (w.e.f. 1.6.2002) or any other person responsible for paying to a resident any income by way of rent. Prior to 1.6.2002 no individual or HUF was liable to deduct TDS from rent.

ii)  The TDS is required to be deducted in case the rent paid or payable to a particular person during a financial year exceeds Rs. 1,80,000 w.e.f.1.7.2010 (upto 30.6.2010 the limit was Rs. 1,20,000).

iii) A facility has also been provided to obtain a certificate from the Assessing Officer for deduction of income-tax at a lower rate or for no deduction of income-tax in appropriate cases by making application in From No.13.

iv)  For the purpose of this section rent means any payment by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or factory building together with furniture, fixture, fittings and land appurtenant thereto. It will not be relevant whether the payee is the owner of the building or not?

     W.e.f. asst. year 2007-08, the Taxation Laws (Amendment) Act, 2006 have enlarged the scope of rent for the purpose of Sec. 194I, so as to include machinery, plant and equipment, whether rented together with building or separately, irrespective of the fact whether they are owned by the payee or not?

v)   The rates of TDS on rent are as under:

Particulars	Rate upto 30.09.09	Rate w.e.f. 01.10.09
Use of any land, building, furniture or fittings	15% (when payee is individual or HUF) 20% in other cases.	10% for all assessees
Use of plant, machinery or equipment	10% (from 1.6.07 to 30.9.09) prior to 1.6.07 the rate was same as rent of land and building	2% for all assessees

a. At the rate specified under the Income Tax Act; or

b. At the rates in force; or

c. At the rate of 20%.

2. Will tax be deducted from service tax included in rent?

   Service tax paid by the tenant does not partake the nature of income of landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore tax deduction at source (TDS) under Sec. 194-I of the Income-tax Act would be required to be made on the amount of rent paid/payable without including service tax.

   Further No TDS on service Tax: As per circular 01/2014 dated 13.01.2014 TDS is not applicable on service tax part if service tax is shown separately.

3. What does the “rent” mean for the purpose of Sec. 194-I?

   “Rent” means any payment, by whatever named 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.

In other words, besides tax on land and building, tax shall now also be deductible for leasing out or hiring of machinery, plant, equipment, furniture and fittings whether given separately or together. Further, it shall be deductible whether or not any or all of the above are owned by the payee?

4. What are the circumstances under which no tax is to be deducted at source on rent as defined under Sec. 194-I ?

   No tax is required to be deducted at source under this section if the following conditions are satisfied:

   A) Where aggregate amount of rent does not exceed Rs. 180,000:- No tax is to be deducted if the aggregate amount of rent in the previous year does not exceed Rs. 180,000.

   B) Rent paid to the Government and certain entities:- No tax at source needs to be deducted from payments by way of rent made to Government and entities whose income is exempt from income-tax under clauses (20) and (20A) of Sec.10 of the Income tax Act.

   C) Certain entities required to file return under Sec. 139(4A) or 139(4C):- As per rule 28AB certain entities who are required to file return of income under Sec. 139(4A) or 139(4C) may apply in Form No. 13 for no deduction of tax at source provided certain conditions are satisfied.

   D) Certain entities whose income is unconditionally exempt under Sec. 10:- In case of certain entities whose income is unconditionally exempt under Sec. 10 and who source : www.trpscheme.com (As amended by Finance Act, 2013) are statutorily not required to file return under Sec. 139 there will be no requirement for TDS, since their income is any way exempt.

5. Where is the limit of Rs. 180,000 for non-deduction of tax at source applicable in case of each co-owner?

   Where the share of each co-owner in the property is definite and ascertainable, the limit of Rs. 180,000 will be applicable to each co-owner separately.

6. What are the provisions regarding low deduction or no deduction of tax on rent under Sec. 194-I ?

   Any person to whom rent is payable may make an application in Form No.13 to the Assessing Officer and obtain such certificate from him, as may be appropriate, authorizing the payer not to deduct tax or to deduct tax at lower rate.

   As per Sec. 206AA(4), w.e.f. 1-4-2010, no certificate under Sec. 197 for deduction of tax at Nil rate or lower rate shall be granted, unless the application made under that section contains the Permanent Account Number of the applicant.

7. What is method of taking credit of TDS on advance rent ?

   On advance rent pertaining to more than one financial year, the tax is deducted at source in the year of receipt of advance rent. The credit for TDS shall be allowed to the assessee in the same proportion in which such income from rent is offered for taxation for different assessment years, based on the single TDS certificate furnished for the entire advance rent.

   However, if the rent agreement gets terminated in a subsequent year or rented property is transferred and the balance advance is refunded to the transferee or the tenant, as the case may be, the credit for entire balance of TDS which has not been given credit, shall be allowed in the year of termination.

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TDS Applicability on Custom House Agent & Principal Payment.

TDS applicable under Head of Custom House Agent Bill on Status of Agent, which are as under:

U/s. 194C - Shipping Line Charges, Stamp Duty, Insurance etc.,
U/s. 194J - Survey and
U/s. 194C - CFS Charges, Cargo Transportation, Uploading Charges etc.

Condition 1 : If CHA Service Charges & Reimbursement Charges Bill Are Separate.

If Bill is Separate then TDS is not applicable to CHA but if we lift the veil because of "CHA is agent only" then expense addressed to Principal Company, then This Principal Co. is liable to deduct TDS on these expenses and Co. should book expense on respective head. However Mode of deduction is not prescribed because all payment are routing through agent,  but Co. should advise to agent to pay them ( respective exp ) net amount which is after deduction amount  and claim only net amount for using his cash flow on behalf of Co,  and Co. should transfer to CHA after tds deduction on that part the same net amount.

Condition 2 : If CHA Service Charges & Reimbursement Charges Bill Are Not Separate and it is Consolidated Bill

If Bill is not Separate then TDS is applicable on whole amount including this reimbursement amount irrespective of this, that he is agent. However expense head Co. should book expense head, as per their nature.  Applicability of section will be 194C however department is asking some time it u/s 194J. Company can go ahead with 194C also based on judgement of time

TDS applicable under Head of Custom House Agent Bill on Status of Principal, which are as under:

U/s. 194C - Handling Charges, Service Charges etc.

Condition 1 : If CHA Service Charges & Reimbursement Charges Bill Are Separate.

TDS is applicable on this part in all case. As a Industry Practice they are deducting u/s 194C, but department is asking in many survey u/s 194J. Principal Co. can go ahead with 194C also based on judgement of time

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No TDS from distribution of rental income earned by a society on behalf of its member.

No TDS from distribution of rental income earned by a society among its members.

Tax deducted at source (TDS) and Tax collection at source (TCS), as the very names imply aim at collection of revenue at the very source of income. It is essentially an indirect method of collecting tax which combines the concepts of “pay as you earn” and “collect as it is being earned.” Its significance to the government lies in the fact that it prepones the collection of tax, ensures a regular source of revenue, provides for a greater reach and wider base for tax. At the same time, to the tax payer, it distributes the incidence of tax and provides for a simple and convenient mode of payment.

This are the most commonly credited accounts in profit & loss account of any Co-operative Housing Society. They are credited under different heads namely Maintenance charges Municipal Taxes, Electricity Charges, Lift Maintenances Charges, Water Charges, vehicle rents on behalf of its member owning those vehicles etc.

It may be emphasized that the society merely acts as an agent who collects this charges on behalf of members & spends the same to meet the various joint expenses of the society. Any surplus generated due to these types of income is not chargeable to tax as it is exempt based on the ‘concept of Mutuality’. The basic principle of Mutuality is a mutual association arises when persons forming a group; associate together for a common object and contribute money for achieving that object and divide the surplus amongst them in the character. The cardinal requirement in case of mutual association is that “All the contributors to the common fund must be entitled to participate in the surplus & all the participators to the surplus must be contributors to the common trade. In other words there should be complete identity between the contributors and the participators.

Where assessee co-operative society having collected jeep rentals on behalf of its members owning those jeeps, remitted said amount to members, it being a welfare activity and there was no element of work contract involved, assessee was not required to deduct tax at source while making remittance in question.

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TDS Deduction on Mobile Tower Rent comes u/s. 194-I not u/s. 194C

Income Tax Department had clarify that the renting of mobile tower would attract lower TDS Deductions u/s. 194-I and not u/s. 194C on the grount of Receipts from provision of passive infrastructure services to the mobile operators amount to renting and would attract lower TDS deduction under section 194-I and not under section 194C.

Facts:

1. The petitioner, Indus Towers Ltd., provided passive infrastructure services to the mobile operators ('customers'), which, inter-alia, included, tower, shelter, diesel generator sets, batteries, air conditioners, etc.
2. It applied for issue of a lower deduction certificate at rate of 0.5% on its project receipts under Sec. 194C of the IT Act, but AO issued lower deduction certificate at rate of 2.5% under Sec. 194-I of the IT Act.
3. Writ was filed to challenge the revisionary order of CIT who affirmed the decision of AO.

Issue

• The issue before the High Court was whether the activity, i.e., provision of passive infrastructure services by petitioner to the mobile operator would constitute renting within the extended definition under Explanation to Section 194-I or whether the activity was service without any element of hiring or letting out of premises?

Held:

• It was the 'operative intention of the parties' which had to be ascertained to decide whether the arrangement amounted to a lease or a mere license as decided by the Supreme Court in case of Rajbir Kaur v. S. Chokesiri and Co., AIR 1988 SC 1845.
• As per the service agreement between assessee and the customers it was found that, although the access to infrastructure was given to the mobile operators, yet the possession and control of the property were with the petitioner.
• The dominant intention in these transactions – between petitioner and its customers – was the use of the equipment or plant or machinery. Therefore, the submission of the petitioner that the transaction was not 'renting'and would be covered under Section 194C, was incorrect.
• Equally, the revenue's contention that the transaction was one where the parties intended the renting of land (because of the right to access being given to the customer) was also incorrect. The underlying object of the arrangement or agreement was the use of the machinery, plant or equipment, i.e., the passive infrastructure.
• The 'operative intention' here was the use of the equipment. The use of the premises was only incidental.
• Therefore, the provision of passive infrastructure services to the mobile operators amounted to 'rent' for use of the machinery, plant or equipment.
• So, it was concluded that tax deduction be made at the rate of 2%, as prescribed under section 194-I for the use of any machinery, plant or equipment.

Source: www.taxmann.com

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Clarification Regarding TDS of Rent Service under Chapter XVII-B on Service Tax Component.

SECTION 194-I OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - RENT – CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SERVICE TAX COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS

CIRCULAR NO. 1/2014 [F.NO.275/59/2012-IT(B)], DATED 13-1-2014

The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.

2. Attention of CBDT has also been drawn to the judgement of the Hon'ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

4. This circular may be brought to the notice of all officer for compliance.

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Important Brief Notes for TDS on Property u/s. 194 (IA).

Section 194(IA) has been inserted by Hon’ble Finance Minister Mr. P. Chidambaram while presenting the Budget 2013 and would come into force with effect from 1st June 2013.

The main motive behind such action is to curb the laundering of black money through sale of immovable property (other than rural agricultural land).

The section burdens the buyer of the property to deduct tax @ 1% of the amount paid or payable to the seller in case of value of transaction exceeding Rs.50,00,000/-.

But this provision is applicable only for the payment made to Residents for transactions with Non-Residents as covered under section 195 of The Income Tax Act, 1961.

What about the applicability of Sec 203A for obtaining the TAN by the buyer? 
In order to remove such hardship, sub-section 3 of section 194(IA) has been introduced which doesn’t mandate the procurement of TAN.

As per Notification No. 39 dated 31st May 2013, the TDS deducted has to be deposited within a period of 7 days from the end of the month in which the deduction is made.

Form 26QB has been prescribed for making such payments and the same has been uploaded in the website of NSDL.

The TDS certificate in Form 16B would be issued within 15 days from the due date of deposit of TDS. In case of non-availability of PAN, the TDS would be deducted at 20% of the amount paid or payable.

In case of transactions made in installments, the TDS has to be deducted at the time of paying each installment.

In calculating the value of Rs.50,00,000/- the aggregate of payments has to be taken into consideration and not the individual payment. So, there is no tax planning possible by way of creating multiple buyers and sellers.

Is there any exemption to the seller in case he is eligible for taking exemption from capital gains under section 54?
No, because the TDS is on the value of transaction and not on the amount of capital gain. So, investing in the assets specified under section 54 is not of any use. 

The value of 50,00,000/- pertains to a particular unit or property and the value refers to the value on the date of agreement provided the payment has been done through cheque/DD.

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PAN is compulsory of Landlord if rent paid above 1 Lakh.

The Income Tax Department clarify regarding Quoting of PAN number of landlord is must when the salaried Employee (Taxpayee) claming rent exemption from Income Tax, amount of Rs. 100000 annualy or monthly Rs. 8334 or more in a current financial year under "House rent allowance" tax benefits.

The Salaried Employee (Taxpayee) when claiming Tax exemption from Gross Income with respect to House Rent Allowance received from the Employer is now required to report compulsory the PAN of the landlord to the employer, if the rent paid by the employee to the landlord exceeds Rs 1 lakh per annum or monthly Rs. 8334, along with the rent receipt, said Minister of Sate for Finance J D Seelam in a written statement in the Rajya Sabha on Tuesday.

He quoted a circular by the Central Board of Direct Taxes (CBDT) on the matter of deduction of tax at source during the payment of salaries.

"In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employees," he added.

In a separate response, Seelam said the number of tax assesses have increased manifold. In the past 15 years, the number of effective IT assesses has increased by more than three times from 1.16 crore as on March 1997 to 3.63 crore at the end of March 2012.

He also said 42,800 persons other than companies admitted to a taxable income exceeding Rs 1 crore.

"The Cabinet has approved the cadre restructuring of the Income Tax Department in May 2013. The implementation of the same is under progress," he said.

Additional 1,080 assessment units to be manned by around 20,000 more personnel have been created to meet the increasing number of IT assesses, he said.

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TDS on Sale of Immovable Property, e-Payment, e-Tutorial & FAQs.

As per Finance Bill of 2013, TDS is applicable on sale of immovable property wherein the sale consideration of the property exceeds or is equal to Rs 50,00,000 (Rupees Fifty Lakhs). Sec 194 IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration. Tax so deducted should be deposited to the Government Account through any of the authorized bank branches.
 

Facility for furnishing information regarding the transaction of sale of immoveable property and payment of TDS thereof is available on this website.
 

Detailed procedure, user friendly e-tutorial, list of Bank branches authorised to accept TDS and Frequently Asked Questions (FAQs) are available on this website for reference.

Points to be remembered by the Purchaser of the Property:

1. Deduct tax @ 1% from the sale consideration.
2. Collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.
3. PAN of seller as well as Purchaser should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction.
4. Do not commit any error in quoting the PAN or other details in the online Form as there is no online mechanism for rectification of errors. For the purpose of rectification you are required to contact Income Tax Department.

Points to be remembered by the Seller of the Property:

1. Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
2. Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.

Frequently Asked Questions

Online form for furnishing TDS on property (Form 26QB)

E-tax payment on subsequent date

List of Authorized Banks for e-payment

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1% TDS on properties valued above Rs 50 lakh rule and issue.

MUMBAI: Shares of real estate companies crashed on Friday on fears that demand for homes in metro cities will see a slowdown after finance minister P Chidambaram proposed to levy 1 per cent tax deducted at source, or TDS, on properties sold for over Rs 50 lakh. Anybody selling a home for Rs 50 lakh will have to pay Rs 50,000 to the government as TDS.

This will increase the price of residential properties. Shares of India's largest real estate company DLFBSE 1.50 % plunged 6.25 per cent to close at Rs 259 and the benchmark index for real estate sector, BSE Realty Index, plummeted 3.93 per cent to close at 1931.

Analysts fear property transactions in national capital region, Delhi (NCR), and Mumbai may see a further fall, hitting the already struggling sales. "The levy of 1 per cent TDS on property value exceeding Rs 50 lakh will curb movement of black money within the real estate sector," said Phillip Capital, a domestic brokerage, in a research note released on Friday.

"To avoid TDS, property transactions may see a spurt till May 31, 2013 as the new tax law is only effective from June 1, 2013," the brokerage said. The service tax abatement on flats with carpet area of 2,000 square feet or more, or value of Rs 1 crore or more, has been reduced to 70 per cent from 75 per cent. This means real estate developers who were paying 12.5 per cent service tax on 25 per cent of the value will now have to pay for 30 per cent of the value.

"The effective service tax rate for real estate companies will increase by 62 basis points to 3.7 per cent of the property value. The real estate companies may choose to pass on this extra tax burden to customers," said Suresh Surana, Founder, RSM Astute Consulting Group.

Analysts say demand for super-premium properties may also get impacted after the government proposed a 10 per cent surcharge on individuals who earn yearly income of more than Rs 1 crore.

A proposal to double surcharge to 10 per cent for companies whose taxable income exceeds Rs 10 crore will hit real estate developers. "The tax surcharge is seen as negative for real estate companies, the effective corporate tax rate will increase by 154 basis points to 33.99 per cent from 32.44 per cent," said Karvy Stock Broking.

Source: The Economics Times

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How to deduct Rent from Salary by Employee u/s. 80GG in Asstt. Year 2013-14

Deductions is respect of rents paid (Section 80GG):

Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-

(a)  the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b)  the employee files the declaration in Form No. 10BA. (Annexure VIII)

(c)  He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income, subject to a ceiling of 25% thereof or Rs. 2,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG.

(d)  The employee does not own:

 (i)  any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or

(ii)  at any other place, any residential accommodation being accommodation in the occupation of the employee, the value of which is to be determined under Section 23(2)(a) or Section 23(4)(a) as the case may be.

The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent.

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How to calculate Annual Income / Taxable Income from property?

Regarding deduction of TDS on Rent it must to calculate Annual Income/Taxable Income from Property properly. As per income Tax law the Annual value/Taxable value of property is considered as higher of the following:

• Actual rent received or receivable in a year;
• Reasonable expected rent of the property.
  

[ The reasonable expected rent is deemed to be the sum for which the property might reasonable be expected to be let out from year to year and is normally higher of (a) municipal value; (b) fair rent. However, if the property is covered by a Rent Control Act, then the amount so computed cannot exceed the Standard Rent determinable under the Rent Control Act.]

As mentioned earlier, the assessee has the option to choose only one house as self-occupied property. Rest of property is assessable to income tax on the basis of its annual value.

Deductions:

From the annual value, the following deductions are available under the Income Tax Act:

1. Municipal Tax paid.
2. 30% of the net annual value of the house property towards Repair & Maintenance charges (Deduction is fixed @ 30% whether assessee incurs more or less amount on repair and maintenance of the house).
3. Actual Interest paid on housing loan whether house is actually let out or is deemed to be let-out.
4. For self-occupied property, maximum interest on housing loan is restricted to Rs. 1,50,000 p.a., subject to certain other stipulations.
   

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No TDS even if the Rent collected exceed limit whether the property is owned jointly.

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:

• @ 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:

• 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.”

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