No TDS on Service Tax Component of Rent

By | April 20, 2016
(Last Updated On: April 20, 2016)

CIRCULAR NO. 4/2008, DATED 28-4-2008

Section 194-I of the Income-tax Act, 1961 – Deduction of tax at source – Rent – Clarification on deduction of tax at source (TDS) on service tax component on rental income under section 194-I

Representations/letters have been received in the Board seeking clarification as to whether TDS provisions under section 194-I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax) or net rental amount payable (exclusive of service tax).

  1. The matter has been examined by the Board. As per the provisions of section 194-I, tax is deductible at source on income by way rent paid to any resident. Further rent has been defined in section 194-I as

“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;

  1. Service tax paid by the tenant doesn’t partake the nature of “income” of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, it has been decided that tax deduction at source (TDS) under section 194-I of Income-tax Act would be required to be made on the amount of rentpaid/payable without including the service tax.
  2. These instructions may be brought to the notice of all officers working in your region for strict compliance.
  3. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties.
Direct Taxes Ready Reckoner
Service Tax Ready Reckoner
Company Law Ready Reckoner
tax deduction at source
New Books Released on Tax , GST and law

7 thoughts on “No TDS on Service Tax Component of Rent

  1. Pingback: TDS Rates and Limit revised w.e.f 01.06.2016 - Tax Heal

  2. Pingback: TDS on Commission or brokerage ; Section 194H - Tax Heal

  3. Pingback: TCS on sale of Cars | Tax Heal

  4. Pingback: Section 206c(1d) of Income Tax act | Tax Heal

  5. Pingback: TCS on cash sale of goods or services > Rs 2 Lakh wef 1.6.16 | Tax Heal

  6. Pingback: TCS on Sale of motor Vehicle above Rs 10 Lakh w.e.f 01.06.2016 - Tax Heal

  7. Pingback: Rate of TCS on Cash sales if Buyer PAN not available - Tax Heal

Leave a Reply

Your email address will not be published. Required fields are marked *