In accordance with Section 194-I of the Income Tax Act, individuals and Hindu Undivided Families (HUFs) responsible for paying rent to a resident must adhere to specified tax deduction regulations. According to The Times of India report, the legislation outlines two distinct rates for tax deduction at source.
(a) A rate of 2% applies to the use of machinery, repair or equipment.
(b) A rate of 10% is applicable for the use of land, building (including factory building), land appurtenant to a building (including factory building), furniture of fittings.
However, it is crucial to note that no tax deduction is required if the aggregate rent credited or paid during the financial year is below Rs. 1.8 lakh.
Furthermore, individuals or HUFs with total income surpassing the monetary thresholds specified in section 44AB(a) or 44AB(b) are obliged to deduct income tax at source under this section.
The report added that the term ‘rent’ encompasses payments made under lease, sublease, tenancy or any other agreement or arrangement for utilizing land, building (including factory building), land appurtenant to a building (including factory building), machinery, plant, equipment, furniture, fittings, etc.
Read more at: ET NOW
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