TDS on Security Deposit

[dhiraj bagri]

Dear Members,

Need clarifications on the following situation: -

A company takes a property (say Flat) in AY 2012 - 13 on Rent for Rs.10 Lacs p.a. and gives security deposit say of Rs.50 Lacs and Rs.5 Lacs is adjustable with rent every year.

Now as per the provision said security deposit is subject to TDS i.e. company have to deduct TDS on the whole amount of security deposit since security deposit will be treated as advance rent.

Further, if TDS is deducted on whole amount of security deposit in the year in which deposit is given then how would owner of property (is a company) claim the TDS credit.

In 26AS TDS would be reflected in AY 2012 - 13 only but it would not be advisable to claim the whole amount of TDS in the same AY as income has not been generated in the same AY 2012 - 13. and also if we claim TDS to the extent of income earned by the owner then how would the owner claim the balance TDS credit in subsequent AY as same would not reflect in 26AS.

Also, in ITR - 6 there is an option while filling up the details of TDS deducted that we have to fill Total Tax deducted and amount of TDS claimed out of the TDS deducted. Then if we fill the details like this then how would be possible to claim TDS credit in the situation enumerated above. 

Need your valuable opinion and any reference or case law will be quite helpful for the same.

Thanking You

With Regards

Dhiraj Bagri
9903005485

[H P Jhunjhunwala]

Dear Sir,   Plaese refer to Circular issued by Income tax Department in which TDS was imposed on payment of Advance Rent you will get the solution to your problem.   Yours Manoj           --- On Fri, 8/26/11, dhiraj bagri <dhira...@gmail.com> wrote:

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[Kalidas Ramaswami]

In my view not withstanding the present system of granting tax credit,the principle laid down in the cicular quoted by me cannot be disputed.in my view for the subsequent years the assessee should claim tax credit as per circular by seeking an application u/s154 referring to the circular.
regards
kalidas  
 

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Date: Fri, 26 Aug 2011 23:55:12 -0700
From: hp_jhun...@yahoo.com
Subject: Re: [PDRUNGTA] TDS on Security Deposit

[jaydipmuk...@gmail.com]

[ak.mondal]

Dear Professional Colleague

At the time of payment Security Deposit of Rs.50 lacs , TDS to be deducted. For accounting purpose ,the owner should show TDS amount as Advance Tax and proportionate amount can be adjusted in each year.

 

Thank you

 

CA Asit Kumar Mondal

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[ecotech]

TDS has to be deducted if it is a non-refundable even in case of cancellation of contract. Otherwise, TDS will be deducted only when the right to get it adjusted arises for the lessor. Credit for TDS has to be claimed in the year in which it has been deducted. Now, after amendments, there is no need to keep parity of income with the TDS claim.

 

JNGupta