I have rented out a property in Gurgaon and the lessee is asking me for a letter from the Income Tax Dept. stating that he does not need to deduct the tax at source. Is this correct? If so how and where do I get this letter? Vijay
The TDS on rent is provided in section 194I of the I TAct. The TDS has to be made by any tenant if the total rent paid during the year is exceeding Rs 1. 2 lakhs. The exception is that the individuals and HUF are exempt from TDS on rent payment if they do not fall under tax audit provision.Therefore , if the lessee is any person who is required to deduct the tax at source on rent payable to you which should be exceeding Rs 1.2 lakhs , may not deduct tax at source only if income tax department t i.e your assessing officer gives a certificate of deduction of tax at lower rate as provided under section 197 of the I T Act. The said provision is as under
197. (1)Subject to rules made under sub-section (2A), where, in the case of any income of any person or sum payable to any person, income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194, 194A,194C, 194D, 194G , 194H, 194-I , 194J, 194K, 194LA and 195, the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax , as the case may be, the Assessing Officer shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.
(2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be.
Hence , your tenant is right. You should file a petition in your A.O’s office for lower deduction of tax rate. The said petition has to be done in Form 13 which you can get from here.
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