Updated on November 28, 2024 12:35:21 PM
TDS on machinery rent is tax deducted at source from the rental payment of machinery, which is required to be deposited with the government. On crossing the threshold limit of Rs. 2,40,000, the TDS would be deducted by the deductee and deposited with the government within the given time period. Therefore, it is recommended to approach a chartered accountant to help you with filing a TDS return and obtain a TDS certificate. In this article, we will provide you with complete insights into how to proceed with the TDS on rent for machinery.
TDS on machinery rent under Section 194-I of Income tax act, 1961 states that the tenant who gains the right to occupy the machinery on lease or rent will deduct the tax at source from the rental payment of machinery. Before the payment is made to the resident landlord, it is important to deduct a tax from the rental payment that would be ultimately payable to the central government.
The term 'rent' ‘is’ referred to by name within the criteria for any tenancy, lease, sublease, agreement, or arrangement that facilitates the utilization of land, buildings, machinery, equipment, or fitting.
While the term ‘machinery’ is not defined under the Income Tax Act by itself but rather is defined in relation to depreciation and capital expenditures.
The term machinery typically refers to any mechanical device or apparatus that helps in industrial or business production.
Section 194-I is applicable to:
Simplification:
Any person other than individual & HUF like company, LLP, partnership firms or those individuals or HUFs liable for tax audit u/s 44AB pays rent on machinery to resident person which exceeds Rs. 2,40,000 per annum is required deduct TDS @ 2% at the time of rental payment or when rent is due.
Arrears and advance rent u/s 194-I
Particulars | TDS Rate |
---|---|
Plant and Machinery | 2% |
If a PAN card is not provided by the resident landlord, then the TDS rate will rise to 20%.
No TDS will be deducted if the rent amount does not exceed Rs 2,40,000 per annum and hence TDS will be deducted if rent payment is in excess of Rs. 2,40,000 per annum.
Under Section 194-I, TDS on machinery rent shall be made when a payee is about to receive rental income from the payer (tenant) or at the time of payment through cash or cheque, whichever is earlier.
Here is the time limit for depositing TDS on machinery rent:
Here are the 4 documents that are required at the time of TDS return filing for TDS on machinery rent under Section 194-I:
Following are the exemptions under TDS on rent for machinery under Section 194I:
Here are the penalties and fines under TDS on machinery rent u/s 194-I:
At Bizfoc, we specialize in providing you the best accounting services in filing your TDS for the purchase of property. Here are the reasons why we are known for our services to our clients on filing TDS:
In general, we assist the client to solve their queries and doubts regarding the documentation, procedures, and fees for filling out the form. Other than making your filing successful, we help you make a better decision by covering every aspect of what you actually need to get your TDS.
TDS on machinery rent is a crucial tax implication, which is done under Section 194-I. The TDS deduction is crucial for maintaining the tax regulations and standards under the Income Tax Act. Filing TDS for machinery rent by an individual himself can be a cumbersome and tiring process So, it is advisable to get the TDS filed with the help of CA professionals and experts to get ease in filing TDS.
Yes, advance rent shall also be subject to TDS in the year of payment. However, TDS is applicable for any type of rent, whether it is rent for machinery, whether it is advance payment or after usage of the property, whichever is earlier.
If a resident landlord doesn’t provide a PAN number, he/she is liable to pay TDS at a higher rate of 20% under Section 206AA for rent on machinery.
The TDS must be deducted at the point when crediting the rent to the resident landlord’s account or at the time of payment by the deductor . i.e., tenant whichever is earlier.
The Challan ITNS 281 refers to the form that is used for making the tax payment. This form is issued to reduce the method for filing tax collection details, deposition, or collection manually and encourage filing the tax online to eliminate the usual chance of errors.