Onus on tenant to chop TDS for NRI funds

I’m a non-resident Indian (NRI), and am incomes ₹2.5 lakh yearly as rental revenue from my property in India. I had requested my tenant to deduct and deposit tax deducted at supply (TDS) on the lease. But this didn’t occur as a result of complexities of understanding the character of depositing TDS. I declare my rental and all different sources of revenue in India in ITR-2 returns, and am paying taxes actually. Is this association advantageous, or ought to I personally minimize the 30% TDS each month on behalf of my tenant, and declare it whereas submitting tax returns?

—Name withheld on request

According to the Income Tax Act, tenants should deduct TDS at 31.2% on lease paid to an NRI, and deposit the tax with the federal government. There is not any minimal threshold for deduction of TDS on lease paid to NRIs. The tax have to be deducted from the lease payable on the fee of 31.2%. However, if as a landlord, your complete revenue is beneath the taxable restrict, you may apply for a certificates below Section 197 for decrease TDS deduction. A certificates below Section 197 for decrease TDS would require the deductor, i.e. the tenant, to deduct decrease TDS as per the order of the AO. Note that if the tenant fails to deduct tax from the lease paid to an NRI landlord, there could also be a penalty equal to the tax not deducted as per Section 271C of the Income Tax Act. To adjust to the Act, tenants should get a tax account quantity (TAN) by way of the NSDL web site.

Once the TAN is acquired, he/she will be able to deduct tax each month and pay the remaining to the owner. TDS from lease paid in a calendar month have to be paid by the seventh of the next calendar month. Not depositing TDS in time comes with penal penalties.

It shouldn’t be attainable for the owner to deduct TDS below the given scenario; the onus of this compliance rests on the tenant. But it’s your duty to make sure that your taxable revenue in India has been duly reported in your I-T return to be filed in India.

Archit Gupta is founder and chief government officer, ClearTax.

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