TDS on Rent

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CA Hiral (Querist)

01 September 2009 Dear sir

I want to know that if machinery is taken on rent along with its operator then at what rate TDS will be deducted?
whether it will fall under 194C or 194I?

pl reply soon

Regards
CA Hiral

chetan soni

chetan soni (Expert)

01 September 2009 it will be u/s 194J & the applicable rate will be 10%+surcharge (if any)+ 3% education cess

CA Hiral

CA Hiral (Querist)

01 September 2009 Dear sir

Thanks for the reply but in any case it will not fall under 194J as it is not at all covered under professional services.

Regards
CA Hiral

CA. Bikash Bogi

CA. Bikash Bogi (Expert)

03 September 2009 Hi Hiral

In any case it will fall under 194I of the Income tax Act. In any way it will not fall under 194J. There is some changes regarding the tds rate. You just go through Income tax act(updated)just has recently published by incorporating the changes of this budget.

CA Hiral

CA Hiral (Querist)

03 September 2009 Thanks for the reply.
I have heard that if euipment is hired with its operator then it will fall under 194 C and in other case it ill fall under 194 I.is it true?
please clarify because till date i deduct TDS under 194C.

Thanks in advance

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

27 July 2025 Great question! Here's the clarification on **TDS on rent of machinery with or without operator**:

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### When machinery is hired **with operator**:

* The arrangement is considered a **contractual service** (work contract) because the operator is providing labor/service along with machinery.
* **TDS should be deducted under Section 194C (Payment to Contractors)**.
* Applicable TDS rate: **1% for individual/HUF contractors** and **2% for others** (rates may vary, so check latest).

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### When machinery is hired **without operator**:

* This is purely renting of machinery (an asset), i.e., lease of tangible property.
* **TDS should be deducted under Section 194I (TDS on Rent)**.
* Applicable TDS rate: **2% for plant and machinery** (rates may vary, check latest).

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### Summary:

| Scenario | Applicable TDS Section | TDS Rate (approx.) |
| -------------------------- | ---------------------- | ---------------------------- |
| Machinery with operator | Section 194C | 1% or 2% (contractual work) |
| Machinery without operator | Section 194I | 2% (rent of plant/machinery) |

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### Reasoning:

* Operator provides labor — considered **work contract**, hence 194C.
* Only renting asset — pure rent, hence 194I.

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**So, if you have been deducting TDS under 194C when operator is supplied, that is correct.**

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If you want, I can help you with exact sections and latest rates from the Income Tax Act or guide you on how to file these TDS returns correctly. Would you like that?

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