TDS or Tax Deducted at Source, refers to tax reduced from the income of the payer before it is passed on to the payee. Moreover, in the case of commercial property rent, TDS is deducted from the rent credited to the landlord by the tenant. The TDS amount is then forwarded to the Government. The TDS on commercial property is under the control of Section 194-I of the Income Tax (IT) Act. But, you must be thinking, “What is the percentage of TDS on commercial property rent?” Scroll down to get the answer.
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Tax (TDS) Deduction Rates on Commercial Rent
The rate of TDS on commercial property rent is 10% of the rent credited to the landlord. However, this rate is decreased to 5% if the landlord does not provide the tenant with their PAN (Permanent Account Number).
It is important to note that TDS is not deducted on the entire amount of rent paid, but only if the rent paid is more than Rs. 2.40 lakh in a financial year. Earlier, the TDS amount was limited to Rs. 1.80 lakh.
The tenant income is required to deduct TDS on the rent amount exceeding Rs. 2.40 lakh and deposit it with the government before the due date.
For an individual or Hindu Undivided Family (HUF), the tax audit is responsible for deducting 5% TDS of the rent. This is the case when the family income exceeds Rs. 50,000 per month.
A 2% TDS amount must be paid on the rent for the plant, machinery, and equipment.
In case the tenant fails to deposit the required TDS to the government, they may be liable for penalties.
Hope you understood the TDS provisions for commercial property.
Get help in understanding TDS for your commercial rent by opting for NoBroker legal services.
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What is the Percentage of TDS on Commercial Rent?
Vani
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1 Year
2023-05-24T09:32:58+00:00 2023-05-24T09:35:48+00:00Comment
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