15 February 2009
As per my opinion, If the vehicle is hired for full time then it shall be covered under 194I, and if for specific purpose like pick and drop facility, then 194C is applicable.
16 February 2009
rent under section 194I cover land, building (including factory building) land appurtenant to a building (including factory building)machinery plant equipment furniture fitting. I think vehicle should not be covered into plant & machienary. So TDS will deduct in 194C
16 February 2009
It is a debatable point actually. We have discussed a long on this issue in Forum Section of this website. And the result of the discussion was that i wrote above in my first reply. Many members suggest for 194C but many other suggest for 194I. Practically I think, that until we have any confirmed provision in this regard, its safer to deduct TDS at higher rate. Ultimately, the party will claim it in its ITR so no loss to it. And the deducter will also be safe. But this is my personal view. Views of other members is required on this issue.
16 February 2009
Views of another member as we discussed are as below : 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
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