TDS ON RENTAL INCOMES AFTER EXCLUDING SERVICE TAX, SAY CBDT

Taxpayers can now deduct tax at source on rents after reducing the service tax component on the rentals for commercial space. Service Tax paid by the tenant does not partake the nature of income of
the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, it has been decided that Tax Deduction at Source (TDS) under Section 194-I of Income Tax Act would be required to be made on the amount of rent paid / payable without including the service tax, as clarified by the Central Board of Direct Taxes (CBDT).