28 November 2007
This is most common query now , because of overlapping appearance of two provisions i.e section 194C and 194 I. The amendment to section 194 I from 13.7.2006 , the explanation regarding meaning of rent was substituted to include payment for use land ,building, machinery, plant ,furniture ,equipment or fittings .
This has now created a confusion regarding renting of plant and machinery . For example , as in your case, confusion whether the rental of car , which certainly is coming with definition of plant or machinery , is well founded. Earlier the rental of car was being subject to TDS u/ 194 C
The provision under section 194C is for any kind of work contract whereas the provision under section 194I is for payment for use of things as stated in Explanation under section 194I. This is the fundamental difference between the two provision.
Therefore, if there is an agreement to carry the employee from some place to some place i.e let us say from home to factory or office , such agreement is giving a job to the car supplier company and the car company will get payment only when the work assigned to it , was completed. If he supplies only the car, the company will not pay the amount , because the contract /agreement was for the work of transport of employee. This type of job , which involves , supply of equipment, is covered u/s 194C .
However, if the company hires the car without any assignment of job, the car supplier completes the job the moment he sends the car . How the car is used is of no importance for him . He will get paid for car hire. This type of car hire will suffer TDS u/s 194 I .
Hence, you check your facts , if you were given a contract for transport of something by the car you give on hire or the company simply hires car without assignment of any job.
CAclubindia
