Meaning

This section states applies to assessee other than an Individual and HUF who pays rent to any resident, shall deduct at the time of credit of such income to the account of payee at the time of payment in cash or by issuie of cheque,or draft or any or any other mode whichever is earlier shall deduct TDS at the following rates:

• 2% for use of machinery or plant and machinery
• 10% for the use of land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings.

Time for Deduction of TDS

TDS shall be deducted at the earlier of the following dates:

• at the time of credit of rent to the account of the payee or
• at the time of payment of rent through cash/ cheque/ draft or any other payment mode.

Note: If PAN is not furnished then TDS shall be deducted @ 20%.

Limit of TDS Deduction

The section states that no TDS shall be deducted if the total amount of rent n a financial year does not exceed Rs. 2,40,000.

When TDS shoudnot be deducted?

• If aggregate amount paid or payable during the financial year does not exceed Rs. 2,40,000
• The payer/tenant is an individual or HUF not liable to tax audit as per section 44(AB) clause (a) or (b).
• Rent is paid/payable to a Government agency
• Sharing of proceeds between a Film Distributor and Exhibitor owing the cimema theatre because the share of film exhibitor is on account of composite service and the share is not in nature of rent.

Note:-

• TDS on Security Deposit - If the security deposit is refundable at the time of vacation of property then TDS is not deductible but if the security deposit is adjusted against rent , then TDS is deductible u/s 194I.
• Separate letting out of furniture and building - TDS is deductible only on the rent of building.