TDS on Society Maintenance Charges- Applicability and Rules
Society maintenance charges are a regular expense for residents and businesses occupying apartments, housing complexes, and commercial buildings. But when it comes to tax compliance, one common question arises: Is TDS applicable on society maintenance charges?
The short answer: Yes, TDS on society maintenance charges are applicable, but only under specific conditions. Let’s break it down.
What are Society Maintenance Charges?
Societies collect monthly or yearly charges for upkeep of the property. These are typically used for:
- Repair and maintenance of building structures
- Security services and housekeeping staff payments
- Common area maintenance (CAM) including lifts, lighting, and gardens
- Sinking fund and repairs fund for major projects
When individuals or companies make such payments, the question of TDS on maintenance charges of Society applicability comes into play
Also Read: How to reduce society maintenance cost
Applicability of TDS on Maintenance Charges of Soceity
Under the Income Tax Act, Section 194C, TDS on society maintenance charges may be required if payments are made under a contract for repair, maintenance, or services.
- If an individual resident pays to their housing society: No TDS is required.
- If a company, firm, or tenant pays maintenance to society or commercial complexes: TDS may apply if the limit is crossed.
- Thresholds for applicability:
- ₹30,000 for a single payment
- ₹1,00,000 in aggregate during a financial year
Read more on: TDS on Housing Societies
TDS on Maintenance Charges Rates Under Section 194C, Income Tax Act
Following is a tabulated illustration explaining the rate of repairs and maintenance TDS:
| Nature of Payment | TDS Rates with PAN | TDS Rates without PAN (Under Section 206AB) | TDS Rates (14.05.2020 – 31.03.2021) |
| Credited/paid HUF or resident individual | 1% | 20% | 0.75% |
| Credited/paid to any other person | 2% | 20% | 1.5% |
| Credited/paid to transporters | NIL | 20% | NIL |
Please note: TDS will be deducted on its basic rates only. Thus, zero Surcharge, SHEC and Education CESS will add to these rates.
TDS on Repair and Maintenance Charges of Society
Repair and maintenance charges usually go to contractors, plumbers, electricians, painters, or vendors. In these cases, if the limits specified under Section 194C are crossed, TDS needs to be deducted:
- Deduction Rate: 2% (for payments to contractors)
- Party Responsible: The payer (company, business, or tenant)
- Individuals for personal use are not required to deduct TDS
Read Also: Guide to Income Tax for Housing Society
TDS on Common Area Maintenance (CAM) Charges
CAM charges are common in malls, IT parks, and large housing complexes. These charges cover shared facilities like lifts, corridors, lighting, cleaning, and parking.
- TDS on CAM charges is treated under Section 194C (contract).
- If the yearly CAM charges paid to a facility provider exceed ₹1,00,000, the payer must deduct TDS.
TDS on Society Maintenance Charges Limit
Here is a quick look at thresholds and rules for TDS on Society Maintenance Charges
| Payment Type | Limit per Transaction | Yearly Limit | TDS Section | TDS Rate |
| Repair & Maintenance | ₹30,000 | ₹1,00,000 | 194C | 2% |
| CAM Charges | ₹30,000 | ₹1,00,000 | 194C | 2% |
| Society Maintenance (Resident) | N/A | N/A | Not Applicable | Nil |
| Society Maintenance (Corporate Tenant) | ₹30,000 | ₹1,00,000 | 194C | 2% |
Process of TDS on Maintenance Charges: Deduction and Compliance
If TDS is applicable, here’s the compliance process:
- Deduct TDS at the time of payment/credit (whichever is earlier)
- Deposit the deducted TDS with the government within due dates
- File quarterly TDS returns
- Issue TDS certificate (Form 16A) to the payee
Time of TDS Deduction on Society Maintenance Charges
If the payment is made by or on behalf of the Government, the time limit for TDS deduction is the same day on which payment is processed.
If case the payment is on behalf of any other entity except the Government, TDS deduction will take place on:
- On or before April 30th if the payment is made in March
- For other months, within 7 days from the end of the month on which payment has been made.
The payable person can deduct TDS:
- At the time of crediting the sum to the payee’s account
- Payment is made in cash
- When an amount is credited to an account, whether it is called a “Suspense account” or by any other name, in the books of the person who has to pay that amount, it’s considered as income being credited to the payee’s account. Thus, TDS will be debited if the amount is credited to the account or by any other mode, whichever happens earlier.
Please note: Failing to meet the deadline for TDS deposit under Section 194C could result in severe financial consequences. It may result in accruing interest, facing penalties, and encountering avoidable legal complications.
Conditions to Meet for TDS Deduction on Society Maintenance Charges
The Government must deduct TDS on maintenance payments, if:
- If the contractor or subcontractor is a resident under Section 6 of the Income Tax Act, 1961.
- The consideration amount of the agreement concerning which the payment is processed is ₹30,000 or more.
Threshold Limit for TDS Deduction Under Section 194C
The threshold limit for TDS deductions on maintenance charges is:
- ₹30,000 or more for a single payment.
- ₹100,000 or more for the aggregated value during the relevant financial year.
Please note: if a single payment is less than ₹30,000, but the total value reaches ₹100,00, TDS will be deducted.
Exemptions of Income Tax Deduction Under Section 194C
The following cases are the exemptions where zero TDS deduction will be made. Have a look:
Personal Purposes:
If an individual or HUF makes a payment for personal reasons, no TDS should be deducted from that payment.
Non-resident Contractor
Payment to a contractor who is not a resident will not be subject to TDS under section 194C of the Income Tax Act, 1961. Instead, it will be regulated by the provisions of Section 195.
Ten or Less Goods Carriages
When doing business that involves hiring, or leasing goods carriages, no TDS deductions can be made from any credited or paid sum. This rule applies if the contractor has 10 or fewer goods carriages at any time during the previous year. Also, if they provide their PAN and a declaration to the person making the payment or crediting the amount.
TDS on Society Maintenance Charges at a Lower Rate
As per Section 194C, if the assessing officer (AO) is assured that the overall income of the contractor or subcontractor is justified then they will be eligible for the income tax deduction at any lower rate or no deduction of income tax. Then, the AO can issue the relevant certificate upon request from the contractor or sub-contractor. Subsequently, the contractor or sub-contractor can provide the lower rate or nil TDS certificate.
Clarifications Made by the Central Bureau of Direct Taxes about TDS on Society Maintenance Charges
Circular No. 1/2012
All deductors must issue a TDS certificate in Form No. 16A by generating it through the TIN central system. They can download the certificate from the TIN website, which will have a unique TDS certificate number. These rules apply to all sums deducted on or after 1.04.2012. A digital signature or a manual signature can authenticate the issued certificate.
Circular No. 23/ 2017
TDS should be deducted from the invoice amount for maintenance charges, excluding the GST amount if it is listed separately on the invoice.
However, if the GST amount is not listed separately on the invoice, TDS should be deducted from the entire invoice amount.
Circular No. 715/1995
The routine and regular maintenance contracts, which also involve supplying spare parts, will fall under Section 194C.
Issuance of TDS Certificates
Issuance of TDS certificates in Form No.16A for payments other than salary is a must-do every quarter. According to rule 31, anyone responsible for deducting tax from non-salary payments must issue a Form No. 16A TDS certificate quarterly. The certificate issuance dates are:
| Quarter | Due Date |
| April to June | 15th August |
| July to September | 15th November |
| October to December | 15th February |
| January to March | 15th June |
Consequences for Non-compliance to TDS Under Section 194C
Failure to adhere to Section 194C may lead to outcomes like interest charges, fines, and legal action. Not deducting TDS within the specified timeframe may result in a 1% per month or part thereof interest charge and penalties ranging from Rs. 10,000 to Rs. 1 lakh.
Also Read: GST on Maintenance Charges
Society Maintenance with NoBrokerHood
NoBrokerHood is a society management system that simplifies housing society management, including maintenance fee collection and communication between residents and management.
- The platform automates billing and payments, helping societies maintain transparency.
- For residents and commercial tenants using NoBrokerHood for paying maintenance and CAM charges, the question of TDS applicability remains the same as per the Income Tax Act.
- NoBrokerHood can assist corporate tenants or commercial units in tracking total payments to ensure compliance with TDS limits.
- However, NoBrokerHood itself does not deduct TDS; responsibility lies with the payer—usually companies or businesses paying the society or vendors.
- Using platforms like NoBrokerHood can ease record-keeping, making it simpler to generate reports required for TDS filing and compliance.
All Solutions by NoBrokerhood
Final Words
Hopefully, this comprehensive discussion about TDS on society maintenance charges helps meet all your queries. Section 194C of the Income Tax Act deals with the deduction of TDS on the payment of society maintenance charges. As a thumb rule, TDS must be deducted from society maintenance charges when making a payment to a contractor as per a contract. Ensure to be aware of the norms and conditions related to TDS deductions for ultimate convenience and security.
FAQs
Not if you are an individual resident paying for personal housing. Applicable only if a company or tenant pays beyond threshold limits.
₹30,000 per transaction and ₹1,00,000 in a financial year.
Yes, maintenance charges for common areas are liable to TDS deductions.
Interstate supplies are an exemption from TDS deductions, as IGST applies to such services.
Yes. Repair and maintenance charges attract 18% of the GST rate.
The calculation of TDS under Section 194C involves multiplying the payment to the contractor by the applicable TDS rate as per the nature of the work and the contractor’s status. The TDS amount must be rounded off to the nearest rupee.
TDS rate may go up to 20%.