TDS
This query is : Resolved
24 February 2009
Dear All,
Please let me know whether Dumper , Tractor are considered as Machinery or vehicle as far as TDS u/s 194-I is concerned.
Thanks in advance
Anand
Please let me know whether Dumper , Tractor are considered as Machinery or vehicle as far as TDS u/s 194-I is concerned.
Thanks in advance
Anand
24 February 2009
The hiring of Machinery/ Vehicke is now subject to TDS u/s 194 I . Under Section 194I , rate of tax for an individual is 15% .If you file your return in status of Individual status, rate of deduction shall be 15% .However, if the rent during the year does not exceed Rs 1,20,000,no TDS has to be done.
Therefore, first see whether with each company you are getting rental above Rs 1,20,000 , if not request them not to deduct the tax.
For your ready reference ,section 194I is given as under
"194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of
(a) fifteen per cent if the payee is an individual or a Hindu undivided family; and
(b) twenty per cent in other cases :]
Therefore, first see whether with each company you are getting rental above Rs 1,20,000 , if not request them not to deduct the tax.
For your ready reference ,section 194I is given as under
"194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of
(a) fifteen per cent if the payee is an individual or a Hindu undivided family; and
(b) twenty per cent in other cases :]
25 February 2009
Dear Sir,
My query is related to applicability of section 194-I to plant & machinery & equipment vis-a-vis dumper and tractor in construction industries.
Pl clear whether these are treated as vehicle or machinery while interpreting Section 194-I and its applicability.
CA Anand U Patankar
My query is related to applicability of section 194-I to plant & machinery & equipment vis-a-vis dumper and tractor in construction industries.
Pl clear whether these are treated as vehicle or machinery while interpreting Section 194-I and its applicability.
CA Anand U Patankar
27 July 2025
Great question about TDS applicability under **Section 194-I** on rent paid for dumpers and tractors!
Here’s the detailed explanation:
---
### 1. **Section 194-I Overview:**
* Section 194-I deals with TDS on **rent** paid for:
* **Land**
* **Building**
* **Furniture**
* **Plant or machinery**
* Rate of TDS:
* 15% for individuals/HUF
* 20% for others
* Threshold limit: No TDS if rent ≤ ₹1,20,000 per annum.
---
### 2. **Classification of Dumper and Tractor:**
* **Plant & Machinery**: Includes items used for industrial or commercial production or manufacturing.
* **Vehicles**: Generally, used for transport of goods or passengers.
---
### 3. **Are Dumper and Tractor considered Machinery or Vehicle?**
* **Legal & practical interpretation**:
* **Dumpers and tractors are considered as vehicles** because they are primarily used for transportation purposes.
* They are **not classified as plant or machinery** under tax or accounting treatment.
* Therefore:
* Rent paid for **dumper or tractor** is **NOT subject to TDS under Section 194-I** as rent for plant or machinery.
* However, if the rent is paid for other plant & machinery, then Section 194-I applies.
---
### 4. **What about TDS on rent of vehicles?**
* Rent paid for vehicles is **NOT covered under Section 194-I**.
* For vehicles, there is **no specific TDS provision for rent** under Income Tax Act.
* If the payment is treated as **contract payment or services**, TDS might apply under Section 194C or 194J depending on the nature of contract.
---
### Summary for your query:
| Item | TDS Applicability under Sec 194-I |
| --------------------------------------- | --------------------------------- |
| Dumper | **No (considered vehicle)** |
| Tractor | **No (considered vehicle)** |
| Plant & Machinery (other than vehicles) | **Yes (TDS applicable)** |
---
If the company deducts TDS on dumper or tractor rent under 194I, it may be challenged as incorrect.
---
**Additional Note:**
Some court rulings and tax department clarifications align with this understanding that vehicles are excluded from "plant or machinery" for TDS under Section 194-I.
---
If you want, I can also help you draft a letter or internal note explaining this to your management or tax officer. Would you like that?
Here’s the detailed explanation:
---
### 1. **Section 194-I Overview:**
* Section 194-I deals with TDS on **rent** paid for:
* **Land**
* **Building**
* **Furniture**
* **Plant or machinery**
* Rate of TDS:
* 15% for individuals/HUF
* 20% for others
* Threshold limit: No TDS if rent ≤ ₹1,20,000 per annum.
---
### 2. **Classification of Dumper and Tractor:**
* **Plant & Machinery**: Includes items used for industrial or commercial production or manufacturing.
* **Vehicles**: Generally, used for transport of goods or passengers.
---
### 3. **Are Dumper and Tractor considered Machinery or Vehicle?**
* **Legal & practical interpretation**:
* **Dumpers and tractors are considered as vehicles** because they are primarily used for transportation purposes.
* They are **not classified as plant or machinery** under tax or accounting treatment.
* Therefore:
* Rent paid for **dumper or tractor** is **NOT subject to TDS under Section 194-I** as rent for plant or machinery.
* However, if the rent is paid for other plant & machinery, then Section 194-I applies.
---
### 4. **What about TDS on rent of vehicles?**
* Rent paid for vehicles is **NOT covered under Section 194-I**.
* For vehicles, there is **no specific TDS provision for rent** under Income Tax Act.
* If the payment is treated as **contract payment or services**, TDS might apply under Section 194C or 194J depending on the nature of contract.
---
### Summary for your query:
| Item | TDS Applicability under Sec 194-I |
| --------------------------------------- | --------------------------------- |
| Dumper | **No (considered vehicle)** |
| Tractor | **No (considered vehicle)** |
| Plant & Machinery (other than vehicles) | **Yes (TDS applicable)** |
---
If the company deducts TDS on dumper or tractor rent under 194I, it may be challenged as incorrect.
---
**Additional Note:**
Some court rulings and tax department clarifications align with this understanding that vehicles are excluded from "plant or machinery" for TDS under Section 194-I.
---
If you want, I can also help you draft a letter or internal note explaining this to your management or tax officer. Would you like that?
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