TDS ON CAR PARKING SPACE WHICH SECTION 194C OR 194I
This query is : Resolved
02 June 2009
TDS ON CAR PARKING SPACE, WHICH SECTION. PL LET US KNOW WHICH SECTION WILL BE ATTRACTED.
02 June 2009
TDS on car parking space will be deducted under section 194C. In the case of DCIT VS Japan Airlines (2005) 93 ITD 163 Delhi ITAT has held that parking charges and landing charges paid by the airlines to airport authority is not in the nature of rent. Hence TDS on such payment be deducted u/s 194C. Taking a clue from the this decided case, it can be comfortably concluded that on payment of car parking expenditure the provision of section 195C shall apply.
02 June 2009
In my opinion it should be deducted u/s 194I since charges are paid for usage of the land and there is no contract of work and labour here for deduction u/s 194C.
The said judgement is contravening the section and law itself and therefore is bad in law.
Also, it has held in the case of Kohinoor Infrastructure Ltd. V/s CIT(A) Mumbai that pay & park charges are liable for deduction u/s 194I.
The said judgement is contravening the section and law itself and therefore is bad in law.
Also, it has held in the case of Kohinoor Infrastructure Ltd. V/s CIT(A) Mumbai that pay & park charges are liable for deduction u/s 194I.
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02 June 2009
In the case cited by Mr.Dua charges are levied based on the weight and not based on use of land. Hence it may be distinguished for cited query. On the other hand the case law cited by Mr.Wadhwani will hold good and accordingly 194I attracts.
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03 June 2009
WHAT IS CONTEMPLATED BY 206C(1C) where it says that every person, who grants a lease or license or enters into contract or otherwise or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, to another person, other than a public sector company (hereafter in this section referred to as licensee or lessee) for the use of such parking lot or toll plaza or mine or quarry for the purpose of business shall, at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipt of such amount from the licensee or lessee in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the licensee or lessee of any such licence, contract or lease
27 July 2025
Great question! Here’s a detailed explanation about **TDS on car parking space payments** and the debate between Sections **194C** and **194I**:
---
### TDS on Car Parking Space — Which Section Applies?
#### Section 194C (Payment to Contractors)
* Covers payments for work contracts — i.e., contracts involving labor, services, or supply of goods in connection with a contract.
* Courts have held that certain charges related to airports like parking or landing charges paid by airlines to airport authorities are **not rent but service charges**. (Example: *DCIT vs Japan Airlines (2005) 93 ITD 163 Delhi ITAT* — TDS u/s 194C applies on parking charges here.)
* If the payment is for services rendered (like managing the parking space, providing attendants, maintenance), then Section 194C may be applicable.
#### Section 194I (Rent Payment)
* Covers rent payments for land, building, machinery, or equipment.
* If payment is for **usage of land or space (like parking space)**, without any service component, it is generally considered rent.
* The case of *Kohinoor Infrastructure Ltd. vs CIT(A), Mumbai* held that “pay & park” charges are subject to TDS u/s 194I, treating it as rent.
---
### Key Points from the Debate:
* If the payment is purely for the **right to use the parking space (land/area)**, **Section 194I** is applicable.
* If the payment includes **services related to parking (security, maintenance, management)**, **Section 194C** could apply.
* Many tax experts opine that parking space rent should fall under **194I** because it’s payment for use of land.
* The ITAT ruling in *Japan Airlines* can be distinguished because the charges there were based on aircraft weight and related to landing services, not just land use.
---
### Additional Reference — Section 206C(1C) (TCS on Parking Lot or Toll Plaza)
* Section 206C(1C) deals with **Tax Collection at Source (TCS)** — **not TDS**.
* This section mandates the person granting a lease/license of parking lots to collect TCS from the lessee at the time of receipt or debit of amount.
* Relevant only if you are the lessor/licensor of a parking lot and you collect money from the licensee.
---
### **Summary Table**
| Nature of Payment | Applicable TDS Section | Remarks |
| ------------------------------- | ---------------------- | -------------------------------------------------------- |
| Pure use of land/parking space | Section 194I | Treated as rent for use of property |
| Parking services/contract labor | Section 194C | For service/contract work relating to parking |
| TCS collection by lessor | Section 206C(1C) | Applicable to the owner/licensor collecting parking fees |
---
### Final Takeaway:
* For **normal parking space rent**, **TDS under Section 194I should be deducted**.
* If the payment is a service contract related to parking management, **Section 194C** could apply.
* Look carefully at the contract nature and payment description.
---
If you want, I can help you draft a note or explanation to your finance team or auditors on this. Would you like?
---
### TDS on Car Parking Space — Which Section Applies?
#### Section 194C (Payment to Contractors)
* Covers payments for work contracts — i.e., contracts involving labor, services, or supply of goods in connection with a contract.
* Courts have held that certain charges related to airports like parking or landing charges paid by airlines to airport authorities are **not rent but service charges**. (Example: *DCIT vs Japan Airlines (2005) 93 ITD 163 Delhi ITAT* — TDS u/s 194C applies on parking charges here.)
* If the payment is for services rendered (like managing the parking space, providing attendants, maintenance), then Section 194C may be applicable.
#### Section 194I (Rent Payment)
* Covers rent payments for land, building, machinery, or equipment.
* If payment is for **usage of land or space (like parking space)**, without any service component, it is generally considered rent.
* The case of *Kohinoor Infrastructure Ltd. vs CIT(A), Mumbai* held that “pay & park” charges are subject to TDS u/s 194I, treating it as rent.
---
### Key Points from the Debate:
* If the payment is purely for the **right to use the parking space (land/area)**, **Section 194I** is applicable.
* If the payment includes **services related to parking (security, maintenance, management)**, **Section 194C** could apply.
* Many tax experts opine that parking space rent should fall under **194I** because it’s payment for use of land.
* The ITAT ruling in *Japan Airlines* can be distinguished because the charges there were based on aircraft weight and related to landing services, not just land use.
---
### Additional Reference — Section 206C(1C) (TCS on Parking Lot or Toll Plaza)
* Section 206C(1C) deals with **Tax Collection at Source (TCS)** — **not TDS**.
* This section mandates the person granting a lease/license of parking lots to collect TCS from the lessee at the time of receipt or debit of amount.
* Relevant only if you are the lessor/licensor of a parking lot and you collect money from the licensee.
---
### **Summary Table**
| Nature of Payment | Applicable TDS Section | Remarks |
| ------------------------------- | ---------------------- | -------------------------------------------------------- |
| Pure use of land/parking space | Section 194I | Treated as rent for use of property |
| Parking services/contract labor | Section 194C | For service/contract work relating to parking |
| TCS collection by lessor | Section 206C(1C) | Applicable to the owner/licensor collecting parking fees |
---
### Final Takeaway:
* For **normal parking space rent**, **TDS under Section 194I should be deducted**.
* If the payment is a service contract related to parking management, **Section 194C** could apply.
* Look carefully at the contract nature and payment description.
---
If you want, I can help you draft a note or explanation to your finance team or auditors on this. Would you like?
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