Renting to Corporates. Be aware of TDS deduction in rent

Browsing thro r2IForums, i saw a request for help on TDS exemption certifcate. I was wondering what its really used for. Well i learnt quite a few facts about TDS. A lot of people rent out their apartments and a few end up renting theirs to corporate clients.

While Corporate tenants can fetch more rent then a residential customers, i noticed that there are few heachaches which one has to go through. First don’t expect the corporate tenants to pay the entire rent to you. By Law of the land, TDS is deducted from the rent.

TDS is calculated at 15.45% for rents lesser than 10 lakhs and for rents more than 10 lakhs it is 17%.Please check the latest tax rates. If you want to avoid TDS, you have to submit a TDS exemption certificate obtained from the IT officials in your town where you file tax. You have prove that you are not eligible for a TDS and submit the same to your corporate tenant.

I know a lot of folks dont care to declare the rent paid as Income in their tax fillings. While i read that rental income does not attract TDS for residential customers and is only for Corporate customers, i still need to verify if this is true. The TDS deducted by the corporates will be paid at their IT office and form 16A would be given to you at the end of the year. You can use this to file your taxes along with your form 16 provided by your company.

So the next time you put an advertisment for rent, make sure you include the TDS portion into the rental component or hunt for a non-corporate tenant.I also read that there is a limit of Rs 120000 per year, above which rental income attracts TDS.

Few people split the lease agreement between husband and wife, so that each of their limits of 120k is not exceeded to save on TDS.

Talk to your tax consultant and also to your tenants tax consultant and come to mutual conclusion before letting the house on rent.

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