30 October 2008
WHEN COMPANY IS USING BUS FACILITY TO BRING EMPLOYEES TO FACTORY. THE BUS IS HIRED BY THE COMPANY. AT WHAT RATE TDS SHOULD BE DEDUCTED ON THE PAYMENTS MADE TO THE BUS PROVIDER.
31 October 2008
Dear Sirs, If bus is taken on hire and all maintenance expenses including drivers salary is being born by company then definitely its under purview of section 194I otherwise in any case section 194C is clear about that.
31 October 2008
The section 194 I is related with the rental /hire charges payment which was limited to land & building rental till 13th July 2006 but w.e.f 14th July 2006,the coverage of section 194 I has been expanded to the equipments,plants ,machineries ,furnitures, computers and vehicles rental/hire charges payments. ( in the cases where fixed nature of service is absent and hired P&M or vehicles are used in the random discretion of the service receiver).
Hence, we must exclude the rental payments from the purview of section 194C and TDS should be as per specified rate under section 194I of Income Tax Act.
The TDS rates u/s 194 I are as under –
194 I _ Rent of Land/building _ 20.60%(1 Crore)
194 I_ Rent of P& M (DG Sets, Cars, Wireless etc) 10.30%(1 Crore)
If the vehicles in site has been taken on rent and at the fixed contract of pickup/drop facility of staff (work specified),hence in presence of work as per definitions under 194C,the section 194I will not be attracted.The detailed circular of CBDT No:681 is attached herewith for your reference
31 October 2008
The situation is simple. If the Bus is taken on hire fully meaning the entirety 194I is applicable. On the other hand if it is hirec for just pick uo and drop 194C is applicable.
09 November 2008
Nilesh Shah Replies: Cell: 92246-59941 E mail: nilesh63@vsnl.com
The Rule of Interpretation of Statutes is specific overrides the general. Explanation III to section 194C defines work as transportation of goods or passengers by any mode of transport. TDS needs to be deducted under section 194C.
Explanation to section 194I defines rent & your case does not come under the definition of rent.
CAclubindia
