A comprehensive guide to understand TDS levied on rent paid.
WHO IS THIS GUIDE FOR ?
Persons who are earning from sale of immovable property or agricultural land
|S. No||Nature of Payment||Rates of tax deduction|
|1||Rent of plant and machinery||2%|
|2||Rent of land or building or furniture or fitting||10%|
No tax from the amount payable in respect of rent is deductible where the amount of such rent credited or paid or likely to be credited or paid during the financial year to the payeelandlord or lessee does not exceed Rs. 1,80,000.
Deduction is not required under Sec. 194I if the amount is paid or payable by an individual or Hindu Undivided Family. If :
Representations have been received from various quarters regarding applicability of the provisions of Sec. 194-I of the Income Tax Act to the sharing of the proceeds of film exhibition between film distributor and film exhibitor owning a cinema theatre.
The matter has been examined by the Board and the Board is of the view that the provisions of Sec.194-I would not be attracted to such payment because: the exhibitor does not let out the cinema hall to the distributor.
Generally, the share of the exhibitor is on account of composite services; and The distributor does not take cinema building on lease or sub-lease or tenancy or under an agreement of similar nature.
Under the provisions of Sec. 196, no tax is required to be deducted at source from any sums payable to the government.
The matter with regard to the statutory authorities and the local authorities referred to above, has been examined by the Board. Sec. 190. And it provides for deduction of income tax at source as one of the modes of collection of income tax with respect of an income. And this is notwithstanding that the regular assessment in respect of such an income is to be made in a later assessment year.
The income of an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, is exempt from income tax under Sec. 10(20A).
Similarly, the income of a local authority which is chargeable under the head 'Income from house property' or 'Income from other sources', is exempt from Income-tax under Sec.10(20).
There is no other condition specified in these two clauses of Sec.10 which is necessarily to be satisfied to avail of the income-tax exemption. There is no requirement to deduct income-tax at source on income by way of 'rent' if the payee is the governmental agency.
In the case of the local authorities and the statutory authorities, there will be no requirement to deduct income-tax at source from income by way of rent if the person responsible for paying it is satisfied about his tax-exempt status under clause (20) or (20A) of Sec.10 on the basis of certificate to this effect given by the said authorities.
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