TDS On Rent Income

The TDS is the tax deducted at source. It is the income part which needs to be paid by the tax payers to the Central Government during the assessment year for the income they are earning in lieu of salary, rent and various other sources of income.

The TDS on the rent income is calculated and deducted by the rent payer and thus he provides the rent after deducting the legitimate TDS from the rent amount.

Under the Income Tax Act 1941 Income Tax should be deducted from the Rent paid as per the Section 194-1 of the same Act in the following manner.

• The Person who is responsible for paying any amount by the means of rent to the Indian resident shall deduct the TDS from the rent amount at the time of paying or credit whichever is going to be earlier.

• This liability is implement able on any Indian residents except individual and HUF. However, they are also covered by liability to deduct tax at source if their books of accounts are required to be checked and audited under the section 44AB during the immediate finishing of the financial year. If the turnover from business or profession exceeds the limits specified u/s 44AB during a particular financial year then instantly the rent received by the same person is taken into consideration.

• TDS is deducted from the rent income if the amount increases more than 120000/-per annum.

TDS is not only calculated on the rent received in respect of properties but also on plant and machinery, furniture and fixture etc.

For the machinery TDS is deducted at the rate of 10% from 1st June 2007 which was previously deducted at the rate of 20%. And for land and building including furniture and fixture TDS is deducted at the rate of 20% for the normal payee and 15% for individual and HUF.

In the language of Income Tax rent is any amount paid in respect of usage of land, machinery, equipments etc. So if any person is getting any credit in respect of lending the same is liable to pay TDS.