Quiz for the week (11 Mar 2024):

Ms.Iniya resident Indian engaged in trade entered in to a rental agreement with Joseph a non-resident Indian for occupying the premises for a monthly rent of Rs.60,000 in April,2023. She paid rent by credit to NRO account of Joseph in India throughout the financial year 2023-24. State the quantum of tax deductible at source and other procedural compliances required in this regard.

Answer :

In this case, the rent is paid by resident Indian to a non-resident Indian and therefore the provisions of section 195 get attracted. Provisions of section 194-I relating to rent would not apply since it is a payment to a non-resident.

The recipient Joseph has an NRO account in India where the amount of rent is credited by the tenant Iniya. Therefore, it is a remittance within India. Form No.15CA is required only when remittances made to a destination outside India. Since the amount is credited to the NRO account of the non-resident maintained in India, Form No.15CA is not required to be furnished.

As regards other compliances, Iniya must obtain TAN for deducting tax at source. The tax deduction has to be made on monthly basis whenever the rent is credited or paid, whichever is earlier. The tax deduction is without any threshold limit (such as Rs.2,40,000 under section 194-I) and therefore every month rent requires deduction and remittance of tax at source.

The subsequent compliance is filing of TDS return quarterly in Form No.27Q in accordance with rule 31A of the Income-tax rules, 1962.

Since Form No.15CA is not required, the question of obtaining certificate in Form No.15CB does not arise.