All about TDS on Rent
TDS on Rent is to be deducted by person other than individual and HUF.
However if the individual and HUF are liable to tax audit then they are required to deducted TDS on Rent. TDS on Rent should be deducted at the time of payment or credit of the rental income to the account of the payee.
The minimum amount of rent that should be paid so as to attract TDS on Rent provision is Rs 180000. It means that if the rental amount paid during the year is less than Rs180000 then tds on rent is not to be deducted.
For the purposes of section 194I—“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
whether or not any or all of the above are owned by the payee.
For the purpose of TDS Rate on Rent, the assets that are leased are divided into two categories:
- Plant & Machinery ,Equipment, furniture& fittings – Rate of TDS is 2%
- Land &building etc. – Rate of TDS is 10%
No surcharge is applicable on TDS on Rent except when payment is made to a foreign company for an amount in excess of Rs 1 crore. Also no education cess and secondary & higher education cess is applicable for TDS on rent.
Service tax provision on rent
It is to be noted at service tax provisions are also attracted in case the rent paid in the financial year is in excess of Rs 10,00,000. Then service tax @10.30% is to be collected by the person receiving rent.
Although in this case the TDS on Rent is to be deducted only on the rental portion of the payment exclusive of the service tax amount.
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