Car Hire Charges

Dear All,

To claim tax benefits, some of our employees are opting for Car hire charges. There is agreement between our company and car owner. This amount will be deducted from the employee salary and it will be paid to car owner after deducting the TDS. Is this correct way of doing?  Any company follows this?

Please guide me.

 

Regards

Kumar.

Replies (3)

Dear Kumar,

            The company is under no obligation to deduct TDS. coz, the hire charges are paid out of the salary of the emloyees. In that case, TDS deduction does not arise (Unless any of ur employees are liable to tax audit under section44AB).

Dear Mukand,

Thank you for your reply. Company does not pay the TDS. Deducted TDS is part of employee salary.

Dear Kumar,

        then there wont be any problem for the company. But, liability for deduction of TDS does not arise on the employee. Because they wont be subject to tax audit under 44AB.

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