In a recent Circular, the Central board of Direct Taxes (CBDT) has clarified that TDS provisions under section 194I of the Income Tax Act, 1961 is not applicable in case of lump sum lease premium paid for acquisition of long-term lease.
Section 194I of the Income Tax Act mandates tax deduction at source at the prescribed rates from payment of any income by way of rent. The Circular was issued as a result of representations received by the CBDT regarding clarification on the applicability of section 194I of the Income Tax Acton ‘lump sum lease premium’ or ‘one-time upfront lease charges’.
Earlier, the Delhi and Chennai High Courts were expressed a view that these payments constitutes capital expenses and hence, TDS provisions are not applicable. It is in this circumstance, the Board issued the present circular in order to give effect to the above decisions.
Read the full text of the circular below.
