Applicability of TDS Provision if rent payment per person is below Rs. 50,000/ but collectively exceeds Rs. 50,000/

Loading

Query:

If monthly rent of an undivided property jointly owned by 4 people is 56000/- per month  ( 14000 to each co-owner) , will tds have to be deducted u/s 194IB?

Opinion:

Its an intetesting query.
Section 194IB of the Income Tax Act-1961 reads as under:
194IB. Payment of rent by certain individuals or Hindu undivided family
Ins. by Act No. 7 of 2017 (w.e.f. 1-6-2017). It appears that rules 30, 31, 31A, 31AB & 37BA & Form Nos. 16B, 26B, 26QB, 26AS and 27A may apply in relation to section 194-IB.
(1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.
(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.
Explanation.—For the purposes of this section, “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.
In my opinion, if the rent is paid individually to 4 persons separately, the TDS provisions u/s 194IB is not attracted.
Sub section 1 to section 194IB specifically conveys –
“paying to a resident any income by way of rent exceeding fifty thousand rupees”
which means that TDS provision is not linked directly  to the property but to the rent payment to resident.
Word “Individually or jointly” is also missing in the said section) which conveys the interpretation that the provision would be applicable only if it exceeds Rs. 50000 per recipient.
The matter would be a matter of interpretation. I am of the opinion that the TDS provision is not applicable in such case.
(N.J.)

[button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/”]home[/button] [button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/submit-article-publish-your-articles-here/”]Submit Article [/button]  [button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/discussion-on-tax-problem/”]Ask Question [/button]

Menu