TDS on hiring of vehicles

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Ashish

(Querist)
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21 January 2009 I want clarification on rate of tds on hiring of vehicles for office purpose. As per information I received, the same will be having rate of 194I, and not 194C, As vehicle is covered under definition of Plant & Machinery. Kindly clarify at earliest.

CA Amarpal

CA Amarpal (Expert)
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21 January 2009 Hello Ashish,

As per given facts, The TDS rate is 10% +SC(if applicable to the person who is giving the vehicle on hire) +EC+SHEC.

Refer sec. 194I.

C A GROUP COACHING

C A GROUP COACHING (Expert)
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21 January 2009 10.3% + S.CHG IF APPLICABLE

K V Subba Rao

K V Subba Rao (Expert)
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21 January 2009 For a similar Query, I found the following Reply in https://mytaxes.in/index.php?topic=54.0

"There are two different sections that apply in this case: Section 194C (payment to resident contractor and subcontractor) and Section 194-I (Rent of plant, machinery or equipment to a resident).

If you are hiring vehicles for carrying passengers (or employees) then section 194C will apply. In this case, the driver is provided by the transport service/company and it is the responsibility of the service/company to maintain the vehicles. A common example is Call Centre or BPO companies take the services of a transporter to bring employees from home to office and back. If any contract value exceeds Rs 20,000 or Rs. 50,000 in the aggregate during the financial year, you must deduct TDS at 2.06% of the payment if payment to contractor and 1.03% for sub-contractor.

If you are hiring or leasing vehicles (without the drivers provided by the transport service/company) for a certain period, then section 194-I will apply. A common example is when companies provide leased cars to their executives or employees or even business guests, they hire or lease cars from car hiring/leasing company. The transport service/company does not provide the drivers, petrol and day to day cleaning and maintenance. The rate of TDS for all with effect from 1st June 2007 is 10.3%, and the surcharge is 1%. Deduct TDS only when the annual rent together with advance rent exceeds Rs. 1,20,000 per annum".

I suggest you follow the above

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