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TDS of hire charges on vehicle

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This query is : Resolved

suchandan (Querist)
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10 March 2009 We hire vehicle on a contract basis for transportation from warehouse to distributors on fixed monthly hire charges.My question is whether the TDS will attract as a contractor u/s 194C or it will be treated as rent and deducted u/s 194I.Plz suggest

Ramakrishna

Ramakrishna (Expert)
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10 March 2009 194I applies only when rent is paid for the use of any land or any building. In the present case rent is paid for the usage of vehicles, hence there is no question of applicability of Sec 194 I.
And hire charges for the usage of vehicles are very well covered under 194C.

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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10 March 2009 An old disputed point. There are lots of views on this matter. Some says 194I, and other says 194C, but the matter still not clear. Neither from experts, nor form IT department itself. So, to save yourself from lower rates deduction, its better to deduct TDS in 194I at higher rates. It is what we do in practical, Not the legal solution.

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