Hire charges

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Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2013 Dear sir

I need clarification in this regard.

In one of our client company, their employee having car which is used for employment but the car registered in the name of wife of that employee and the company pays hire charges to employee's wife and TDS also deducted u/s 194C as contract.But the company entered agreement with the employee wife for the hiring of car.

In this regard i thought its diversion of Income, its form part of salary, so its taxable in hands of employee only.

Also clarify me Service tax applicable in this regards

Thank you
Rengasamy.R

CA Parul Saxena

CA Parul Saxena (Expert)
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04 March 2013 Yes you are right it is just diversion of income....if it would have been taxable in the hands of employee then tax rate would have been 10-30% depending upon in which slab salary falls....and with this diversion the income is subject to TDS u/s 194C @1%....but in this case clubbing will not be there so income it will be taxable in Employee's wife hands only....and as far as service tax is considered if the limit does not crosses Rs.10,00,000/- (which i am sure would not cross) no question of service tax arises...

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2013 Reverse charge mechcanism applicable in this case irrespect of amount involved and first point i did not get you(Taxable in whose hands).

CA Parul Saxena

CA Parul Saxena (Expert)
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04 March 2013 Taxable in the hands of wife....

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