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Pure Agent under GST and TDS on Rent – Practical Concepts

Pure Agent under GST

  1. The supplier acts as a pure agent of the recipient of the supply when he makes the payment to the third party on authorization by such recipient.
  2. The payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service.
  3. The supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.

Pure agent” means a person who

  1. Enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both.
  2. Neither intends to hold nor holds any title to the goods or services or both so procured or supplied as a pure agent of the recipient of the supply.
  3. Does not use for his own interest such goods or services so procured.
  4. Receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.

TDS on Rent 194IB under Income Tax

Section 194IB states that an individual or HUF, those who are not liable to get their accounts audited u/s 44AB, are required to deduct TDS @ 5% if monthly payment of rent is more than Rs. 50,000. If the payee has not provided his PAN, TDS is to be deducted on 20% which should not exceed the rent of the last month.

But in this section “rent” is defined as a monthly payment made for the use of land or building or both but not for “furniture”. Thus TDS is not to be deducted under both the sections.