TDS on Vehicle Hiring Charges

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2011 My department in a contract with the transporter to provide 05 buses along with Drivers and running expenses viz pertol and maintainance will be borne by Transporter and contract is for maximum kilo meter.

Vehicle hired are in the Possession/Control of Department i.e. 24 hours * 7 Days and department runs it on their specification.

In view of above, please help me to decide the applicability of Sec 194 C or 194 I.

In this regard, i have studied a query which is reproduced below:

Car Rental
• If there is an arrangement with the taxi/car operator to
do a particular assignment or job involving car then it
will be treated as a contractual arrangement and
therefore covered under section 194C. But if the car
supplier only provides the car without specification of
the job then TDS is to deducted u/s 194I.
• For example, if there is an agreement to carry the
employee from one place to another i.e. let us say
from home to factory and back, such agreement is
giving a job to the car supplier company and the car
company will get payment only when the work
assigned to it was completed. If he supplies only the
car, the company will not pay the amount because the
contract was for the work of transport of employees.
This type of job is covered u/s 194C.
• However if the company hires the car without any
assignment of job, the car supplier completes the job,
the moment he sends the car. How that car is used is of
no importance for him. He will get paid for car hire.
This type of car hire will suffer TDS u/s 194I.
Hiring Audio Visual equipments
• Whether a particular payment made towards hire of
audio visual equipment will be subject to TDS u/s
194C or 194I will depend upon the facts of the case.
• If the equipment is hired from the hotel for a particular
event like conference or exhibition etc. being held in
the hotel itself for few hours or days, then payment for
such hiring will be covered u/s 194C being a
contractual arrangement to provide the equipments
for a particular purpose or event.
• However if the audio visual equipments are hired by
the company for a particular period say one month,
quarter or year to be used for different purposes
whatever it deems fit, payment for such hire charges
will be subject to TDS under section 194I as this will be
treated as rent of the equipment. Here hiring charges
for a 'period' becomes the key element for bringing it
under the definition of rent.

Please review and guide me.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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16 July 2011 In this case you have not been assigned a particular contract, and the contractee
handles all the situation, it is clear that you have not to apply your mind on the steering ,accelerator and on the breaks.

Your buses are run according to their work schedule and instructions.

You have to count the money and kilometers only.

This is a case of rent -194I will be applicable.

One more Example-
You have entered into a contract in which from Surat to Shreenathji you are paid Rs. 10000/-. -Case of Contract

You have entered into a contract in which
wher ever your bus goes, you need not to control any thing except money & KMs.-
means you have given it on Rent.

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