Any amount of Income paid to a resident as rent is subject to Tax Deduction at Source (TDS). Deduction should be made either at the time of credit to the account of payee or at the time of payment by cash, cheque, draft or any other mode, whichever is earlier.
Who is liable to deduct TDS on Rent?
Any person who is responsible to pay rent to any resident is liable to deduct TDS. Individuals and Hindu Undivided Families (HUF) are excluded from deducting TDS on rent provided that those total sales, gross receipts or turnover from the business or profession carried on by him doesn’t exceed the monetary limits specified under clause (a) or clause (b) of Section 44 AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid.
Monetary Limits as per Section 44 AB:
Individuals and HUFs are responsible to deduct TDS if,
(a) the total sales, gross receipts or turnover from business exceeds 1 Crore Rupees in any previous year; or
(b) the gross receipts from profession exceeds 25 Lakh Rupees in any previous year.
Suppose if an individual’s total sales from business during the previous financial year (say 2012-13) is less than Rs.1 Crore, then he need not to deduct TDS on rent credited or paid to the account of payee in the current financial year (2013-14).
Suppose if an individual’s gross receipts from business or profession exceeds Rs.25 Lakh Rupees in the previous year (say 2012-13) then he need to deduct TDS in the current financial year (2013-14).
Percentage of TDS to be deducted:
Particulars
|
Percentage of TDS to be deducted
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Any Machinery or plant or equipment
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2%
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Land or Building or Furniture or fittings
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10%
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If PAN not submitted
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20%
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Note: Land or Buildings include factory buildings and land appurtenant (furnishing added support) to a building.
No Deduction of TDS
If the aggregate amount of rent credited or paid/likely to be credited or paid during the financial year doesn’t exceed Rs.1,80,000/- then there is no need of TDS to be deducted.
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