File Your Income Tax Return Before 31st July 2024.
| Table of Content |
Section 194H commission or brokerage
Meaning of commission or brokerage
It includes any payment received or receivable, directly or indirectly by a person acting on behalf of another person for services rendered, or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing other than securities.
| Nature of payment | Threshold limit | Payer | Payee | Rate of tax | Time of deduction |
| Commission or Brokerage | >Rs 15000 during the financial year. | Any person (However, if an individual or HUF whose total sales or gross receipts or turnover from the business or profession carried on by him does not exceed either 1 crore or 50 lakhs respectively, as per section 44AB, during the immediately preceding financial year is exempted from deducting tax at source.) | Any resident | 5% | The deduction shall be made at the time such income is credited to the account of the payee or at the time of payment in cash or by issue of cheque or draft or by any other mode, whichever is earlier. |
Clarifications regarding immovable property
- If the assessee exceeds /violates the limits of section 44AB and is liable to tax audit, then is liable to deduct TDS
- If the individual or HUF violates the above limits then he not be liable to provisions of section 194H as he liable to tax audit owing to other reasons but if his turnover exceeds 1 crore then he liable to deduct TDS.
- A resident individual pays brokerage to an non residents individual broker
- In this case, section 194H is not applicable as now section 195 comes into effect. Hence TDS shall be 20% + educational cess 4%+ surcharge at applicable rates.
- A company makes payment to a resident broker of Rs 60000, but the company is liable to tax audit.
- Here company is the payer and accordingly this section exception is only applicable on individual or HUF.
Section 194I rent
Meaning of rent
Rent means any payment by whatever name called, under any lease, sub lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any-
- Land
- Building( including factory building) ; or
- Land appurtenant to a building (including factory building) ; or
- Machinery
- Plant; or
- Equipment ; or
- Furniture; or
- Fittings,
Whether or not any or all of the above are owned by the payee.
| Nature of payment | Threshold limit | Payer | Payee | Rate of tax | Time of deduction |
| Rent | >Rs 240000 in a financial year | Any person (However, if an individual or HUF whose total sales or gross receipts or turnover from the business or profession carried on by him does not exceed either 1 crore or 50 lakhs respectively, as per section 44AB, during the immediately preceding financial year is exempted from deducting tax at source.) | Any resident | 2% for plant or equipment.
10% for land or appurtenant to a building, furniture or fittings |
The deduction shall be made at the time such income is credited to the account of the payee or at the time of payment in cash or by issue of cheque or draft or by any other mode, whichever is earlier. |
Clarification regarding immovable property
- In case of co owners a) shares is definite and ascertainable b) share is not ascertainable
- When the share is ascertainable then while considering the limit, share of each co owner shall be considered.
- When the share is not definite then TDS on total amount should be calculated.
- The central government initiated and promotes the concepts of business trust in India
Especially during the past 10 years for the purposes of extensive development of infrastructure facilities and real estate investments in India, the former provides many taxation benefits to them. Hence TDS deduction is not applicable in this case.
- Normally, all the provisions in chapter of XVII B are payee centric. The status of payee must be kept in mind before applying the provisions. Therefore, the residential status of payer hardly matters. The tax audit status is only relevant in case of individual or HUF only.
- Also the location of property doesn’t matters.
Section 194IB
| Nature of payment | Threshold limit | Payer | Payee | Rate of tax | Time of deduction |
| Payment of rent by certain individuals or HUF | >Rs 50000 for a month or part of a month | Individual or HUF (However, if an individual or HUF whose total sales or gross receipts or turnover from the business or profession carried on by him does not exceed either 1 crore or 50 lakhs respectively, as per section 44AB, during the immediately preceding financial year is exempted from deducting tax at source.) | Any resident | 5% | The deduction shall be made at the time credit of such income, last month of the previous year or the last month of tenancy, if the property is vacated during the year, to the account of payee or at the time of payment thereof in case of cash or by issue of cheque or draft or by any other mode, whichever is earlier. |
Clarifications regarding immovable property
- Rent means any payment, under any lease, sub lease, tenancy or any other agreement or arrangement for the use of any land or building or both.
- No requirement of TAN.
Section 194M
| Nature of payment | Threshold limit | Payer | Payee | Rate of tax | Time of deduction |
| Payment to resident contractors and professionals | >Rs 50 lakh in a financial year. | Individual or HUF covered under section 44AB. TAN is not required in this case. | Any resident | 5% | The deduction shall be made at the time such income is credited to the account of the payee or at the time of payment in cash or by issue of cheque or draft or by any other mode, whichever is earlier. |
Thus in conclusion government is taking steps continuously to discard all the tax loopholes and make the provisions clearer and well defined.
