Benefiting landlords who rent out their houses, Budget 2019 has increased the limit for TDS on rent paid to them by non-individuals i.e corporates etc. Earlier non-individuals (e.g corporates etc) who rented out houses had to deduct TDS if rent paid was more than Rs 1, 80,000 per financial year.
This limit has now been increased to Rs 2,40,000 per annum. Essentially, this gives tax-related convenience relief to those who depend on rental income.
For example, if TDS was deducted but the receiver’s income was otherwise below the taxable limit or the receiver had invested in tax saving instruments and could nullify tax liability by claiming rebates then he/she would have had to claim a refund of the TDS.
The raising of the limit to Rs 2,40,000 means that TDS has to be deducted only when rent crosses this limit per fiscal.
As per the Income Tax, any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of:
(a) two percent for the use of any machinery or plant or equipment; and
(b) ten percent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings:
Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed Rs 1,80,000.
Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section.
Provided also that no deduction shall be made under this section where the income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in clause (23FCA) of section 10, owned directly by such business trust.
For the purposes of this section, (i) “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 (h) fittings, whether or not any or all of the above are owned by the payee;
(ii) where any income is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
Source: Economic Times