TDS on Crane / Forklift Hiring and Car Hiring
This query is : Resolved
29 July 2009
We have deducted TDS @ 2.266 % in respect of payment towards Car Hiring and Crane / Forklift Hiring during the F.Y. 2006-07, 2007-08 & 2008-09.
Question - 1) Whether TDS is applicable under Section 194 C or 194 I (Where rate of TDS is 10%) ?
2) For Short deduction whether above said payments is disallowed under section 40(a)(ia) of the Income Tax Act ?
Question - 1) Whether TDS is applicable under Section 194 C or 194 I (Where rate of TDS is 10%) ?
2) For Short deduction whether above said payments is disallowed under section 40(a)(ia) of the Income Tax Act ?
29 July 2009
If there is written contract TDS would be under sec 194C
05 August 2009
The Query is still not resolved.
27 July 2025
Here’s a clear breakdown regarding **TDS on Crane/Forklift Hiring and Car Hiring** payments:
---
### 1) **Which Section Applies: 194C or 194I?**
* **Section 194C** applies to payments made for **“work contracts”**, including transportation and manual work.
* **Section 194I** applies to **rent payments** for machinery, equipment, or buildings.
**Crane/Forklift Hiring:**
* Hiring of crane or forklift is typically considered as **equipment hire/rental**.
* Therefore, TDS should be deducted under **Section 194I (Rent)** at the rate of **10%**.
* This is because you are paying for the use of machinery/equipment, not for "work" or "services" per se.
**Car Hiring:**
* If you are hiring a car **without driver** (just renting the vehicle), it is also treated as **rent** under **Section 194I** and TDS @10% applies.
* If the car hiring includes a **driver** (transport service), then it would come under **Section 194C** (contractual transport services) with TDS @1% for individual/HUF and 2% otherwise.
---
### 2) **Short Deduction & Disallowance under Section 40(a)(ia)**
* If TDS is **deducted at a lower rate than applicable** or **not deducted at all**, the related expense can be disallowed under **Section 40(a)(ia)** until TDS is properly deducted and deposited.
* Since the applicable TDS rate on crane/forklift hiring and car hiring (without driver) is 10% under 194I, deducting at 2.266% is **short deduction**.
* Hence, the **payments could be disallowed under Section 40(a)(ia)** for non-compliance in TDS deduction.
---
### Summary
| Service | Applicable TDS Section | TDS Rate | Comment |
| ------------------------- | ---------------------- | ------------------------- | ----------------- |
| Crane / Forklift Hiring | Section 194I | 10% | Equipment rent |
| Car Hiring without Driver | Section 194I | 10% | Vehicle rent |
| Car Hiring with Driver | Section 194C | 1% (Individual/HUF) or 2% | Transport service |
---
If you need, I can help draft a formal clarification note or provide relevant legal citations. Want me to do that?
---
### 1) **Which Section Applies: 194C or 194I?**
* **Section 194C** applies to payments made for **“work contracts”**, including transportation and manual work.
* **Section 194I** applies to **rent payments** for machinery, equipment, or buildings.
**Crane/Forklift Hiring:**
* Hiring of crane or forklift is typically considered as **equipment hire/rental**.
* Therefore, TDS should be deducted under **Section 194I (Rent)** at the rate of **10%**.
* This is because you are paying for the use of machinery/equipment, not for "work" or "services" per se.
**Car Hiring:**
* If you are hiring a car **without driver** (just renting the vehicle), it is also treated as **rent** under **Section 194I** and TDS @10% applies.
* If the car hiring includes a **driver** (transport service), then it would come under **Section 194C** (contractual transport services) with TDS @1% for individual/HUF and 2% otherwise.
---
### 2) **Short Deduction & Disallowance under Section 40(a)(ia)**
* If TDS is **deducted at a lower rate than applicable** or **not deducted at all**, the related expense can be disallowed under **Section 40(a)(ia)** until TDS is properly deducted and deposited.
* Since the applicable TDS rate on crane/forklift hiring and car hiring (without driver) is 10% under 194I, deducting at 2.266% is **short deduction**.
* Hence, the **payments could be disallowed under Section 40(a)(ia)** for non-compliance in TDS deduction.
---
### Summary
| Service | Applicable TDS Section | TDS Rate | Comment |
| ------------------------- | ---------------------- | ------------------------- | ----------------- |
| Crane / Forklift Hiring | Section 194I | 10% | Equipment rent |
| Car Hiring without Driver | Section 194I | 10% | Vehicle rent |
| Car Hiring with Driver | Section 194C | 1% (Individual/HUF) or 2% | Transport service |
---
If you need, I can help draft a formal clarification note or provide relevant legal citations. Want me to do that?
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