Rent received on let out of Furniture, Plant and Machinery with/without Building

02/05/2021 0 By indiafreenotes

If an assessee lets on Hire machinery, plant or furniture and also building & letting of building is inseparable from letting of machinery, plant, furniture, then income from such letting is taxable under Income from Other Sources if not taxed as Business Income. Broadly classifying following nature of rent received on Hire of Assets specified above is taxed under Income from Other Sources:

  • If there is letting of Building as well as the assets & both form Part & Parcel of the same transaction since the two lettings are INSEPARABLE, e.g., Theatre Building and its Furniture is taxable under the Head Income from Other Sources, if not charged as Business Income.
  • If there is letting of Building as well amenities but without any letting of Assets, then this section is not applicable & the whole of such Income earned will be taxed under Income from House Property.

 Permissible Deductions from Income from letting out of Machinery, Plant etc. 

  • Current repairs to the premises held otherwise than as a tenant;
  • Insurance Premium towards physical safety of the premises;
  • Repairs & Insurance of Machinery, Furniture etc.
  • DEPRECIATION based on Block of Assets in the same manner as calculated u/s 32 in Profits & gains from Business & Profession.
  • Any other expenditure not of Capital nature and should be incurred wholly & exclusively for earning such Income.

While learning about TDS on rent, it is also imperative to know more about what the term ‘rent’ actually signifies. Rent equates to any payment, which is made under any sub-lease/ lease/ tenancy/ arrangement/ agreement for using the following:

  • Building (inclusive of factory buildings)
  • Land
  • Land appurtenant to any building (inclusive of factory buildings)
  • A plant like an industrial or manufacturing facility
  • Equipment like tools, computer systems, networks, other infrastructure required for running a business
  • Machinery
  • Fittings
  • Furniture

Tax (TDS) Deduction Rates

Tax (TDS) has to be deducted at the time of crediting/paying the income by way of rent to the payee account through a cheque/draft/cash or other payment methods. The rates of TDS can be summed up as follows:

  • Rent for plant/ equipment/ machinery: 2% TDS on the rent amount paid
  • Rent for land/ building/ furniture/ fittings: 10% TDS on the rent amount paid
  • Individual/ HUF not liable to tax audit: 5% TDS on the rent paid in cases where more than `50,000 is paid per month as rent.