I recently let out a property for rent to an employee of a hotel. I had a rental agreement with the hotel . Now I am being charged TDS at 10% on the rent. Although the property is rented for domestic purpose, is it correct to be charged TDS on rent? If so, what can be done that?
Asked 3 years ago in Income Tax from Hyderabad, Telangana
You had an agreement with the Hotel and Hotel is under obligation to deduct TDS from the Rent they pay. Whether it is domestic or commercial does not matter.
TDS will be applicable u/s 194 I of the Income Tax Act, if the rent is Rs. 1,80,000/- or more per year. You can file return and claim refund.
If rent amount is more than amount prescribed in Sec 194 I (Rs 1,80,000), then TDS is to be deducted by the hotel.
However, you may claim it back while filing your Income tax return in case your Tax deducted exceed your Income tax liability.
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TDS provisions are applicable for commercial accommodation and if the lease agreement mentions clearly that user of the premises is for residential purposes, then you will have to bring this provision to the knowledge of your tenant hotel and discontinue TDS on such rent.