• TDS on rent of residential property owned by co-owners

Hi,
I am a salaried individual, recently moved into a rented apt (just last month). There is only one registered agreement between Self and owner & his spouse as co-owner. I am currently paying a rent of Rs 62k per month. My owner is insisting on not deducting the TDS as the property is owned by him and his wife jointly. As per him, he is not liable to TDS as the rent will be split between him and his wife so it will be less than 50k pm threshold. 

My Questions are as follows;
1. I understand that people split rent to avoid TDS but if I pay rent separately in 50:50 in two different bank accounts then as per my understanding it becomes two instances of rent (two rents) and I will be able to claim only one instance of rent under HRA. So splitting of rent will not help me. If I pay in lumsum then I am obliged to deduct TDS (u/s 194IB). Please confirm?
2. Since it is just a beginning of my rental, please suggest if there is any other way out to avoid TDS as my owner is really uncomfortable with TDS though I told him that he can always claim it in his tax filing (form 16C)
3. Will 15G/ H help me getting rid of my obligation? Because I just want to safeguard myself and don't want to face any scrutiny in future after all its payer's duty to deduct TDS.

Looking forward to your expert views..
Thanks in advance
Asked 10 days ago in Income Tax from Mumbai, Maharashtra

Hi

 

TDS liability could be avoided only if:

1. Payment is made equally to both the co-owners.

Or

2. Payment is made to a joint account of the co-owners

 

In all the other circumstances, you would never know the real ownership of the property and whether they both are showing rental income respectively in their tax returns. So, if any of the above 2 options is not followed, TDS shall have to be deducted.

 

 

 


Another option is if the owner produces a NIL deduction certificate to you. The owner shall have to obtain such certificate from his assessing officer.

Lakshita Bhandari
CA, Mumbai
3545 Answers
174 Consultations

5.0 on 5.0

1 The HRA is based on your rent agreement even if the owner's are two of them I don't think it will affect your HRA. Also as per section 194IB tds needs to be deducted if the rent paid to a person is above 50k per month and in your case the rent you are paying to a person is 31k as rent agreement mention 2 owners. Even if your company take it as 2 rent instabinyou can claim proper HRA while filing your return that's why government has provided you an opportunity to file your return.

2. You won't really attract any TDS query even if you pay total rent to 1 person as there are 2 owners actually.

3. I don't think 15G or H would help as their income would be around 3.72 lakh each.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
1981 Answers
17 Consultations

5.0 on 5.0

1. As you are paying rent for a single property then it will not be two rents if paid to two owners. You are eleigible to claim the whole rent for HRA exemption.

2. From your side, you need to ensure that the rent agreement should be between you and the co-owners specifically stating the amount of rent to be paid to each owner monthly. Limit of Rs.50k is per person. It is the responsibility of the owner to share correct details of ownership with you. The onus is on the landlord.

Vivek Kumar Arora
CA, Delhi
2942 Answers
144 Consultations

5.0 on 5.0

Hello,

 

1. Since you are paying the rent for a single property though there are joint owners or you are paying rent to two-person for a single property, it won't affect your eligibility for HRA exemption. Limit of Rs. 50,000 TDS on rent is for single person.

2. If you pay rent in two different accounts or one joint account of owners, then you won't be required to deduct TDS.

3. Since the owner's income would exceed the basic exemption limit, I don't think 15G/H would help you in this case.

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Neemuch
794 Answers
1 Consultation

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

-No, you will be able to claim HRA on whole rent amount.

 

- Even If you pay in lumsum you are not obliged to deduct TDS (u/s 194IB) as there are two owners.

 

-No, 15G/H will not help you as the income is above exemption limit.

 

 

 

 

Payal Chhajed
CA, Mumbai
2853 Answers
39 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA