194 I or 194C

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Basavaraj

33 Points Posted on 10 May 2007

Please clarify me about whether computer hiring Charges are tax deductible under whic section whether 194I or 194C Please ref the Finance act 2006 for change in meaning of RENT

Replies (3)

as the computer falls under the head plant as per the defination given in the income tax , the hire charges on the computers will be taxable under section 194 I and not under section 194C .

further, in the new budget the rate of deduction on hire charges of the plant was changed to 10% from 15% or 20%.

if any one have the different view , can share their view with the logical reasons.

The One

257 Points Posted on 10 May 2007

The One Says:

In a discussion regarding equipment hire charges it was stated that based on whether it was hiring out or rendering a service by making available the equipment would be the factor for deciding applicability of 194I or 194C. Similar view can be taken here.

Aashok Kumar Sharma

Finance/Compliance Consultant

77919 Points Posted on 06 November 2026

Updated position for computer hire charges:

• Hiring computers (bare right to use the equipment, without services): "rent" includes payment for use of machinery, plant or equipment (Explanation to Sec 194I, since 2006). Computers are plant, so TDS is under Sec 194I(a) at 2%.

• Threshold (from 1 April 2025): Rs 50,000 per month or part of a month. Below that, no TDS.

• Hire with maintenance or IT services (managed service, operator support): if the dominant element is service, it may be a contract for work (194C) or technical services (194J(a) at 2%). The contract wording decides.

• Software licences bundled with hardware: royalty, 194J at 10%, unless Notf 21/2012 applies.

• From 1 April 2026: Sec 393 of the Income-tax Act, 2025.