Is car/cab hiring charged liable to TDS?
Is there any notification that provides exemption for this expense?
If it attracts TDS, under which section should we deduct TDS 194C or 194I?
manjupriya (Paid Assistant) (44 Points)
30 November 2010Is car/cab hiring charged liable to TDS?
Is there any notification that provides exemption for this expense?
If it attracts TDS, under which section should we deduct TDS 194C or 194I?
Devendra
(Chartered Accountant)
(4775 Points)
Replied 30 November 2010
Dear Manjupriya,
1) I think TDS should be deducted u/s 194C.
- Individual @ 1%
- Company or Regd. Firm @ 2%
2) There is no exemption for such expense.
Following link will help you understand better and also contains the Notification/Circular.
https://www.caclubindia.com/forum/tds-applicability-on-hire-charges-on-vechiles-16373.asp
Circular No. 558 dated March 28, 1990, issued by the Central Board of Direct Taxes, which deals with deduction of tax at source from payments by a State Transport Corporation to private bus owners.
Regards,
Devendra P Kulkarni
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 30 November 2010
It should be liable to deduct the TDS under Sec 194I i.e. Payment of rent under the sub head : payment of rent for Plant and machinery.
Regards,
Manoj
Devendra
(Chartered Accountant)
(4775 Points)
Replied 30 November 2010
If the agreement is on monthly basis then TDS to be deducted u/s194I and if agreement is on contract payment then TDS to be deducted u/s 194C.
Regards,
Devendra P Kulkarni
Pradeep Jain
(service)
(143 Points)
Replied 30 November 2010
Relevant circular on this issue:Circular : No. 558, dated 28-3-1990.
On the basis of these terms and conditions, the Board have been advised that although the contract may appear to be a single hire contract, it is actually a service contract (for carrying out any work) entered into between the State Road Transport Corporation and the owner of the bus for plying certain buses on certain routes and subject to certain conditions. In such cases, the provisions of section 194C are applicable and tax will have to be deducted at source from the payments made to the private bus owners. It may, therefore, be kept in mind that the applicability of provisions of section 194C in such cases may be considered on merits in the light of the aforesaid observations, and to this extent the clarification given in question No. 5 in Boards Circular No. 98, dated 26-9-1972 stand modified.
Cheers
Pradeep Jain
prashant goyal
(CA-Final)
(100 Points)
Replied 30 November 2010
TDS on hiring car is to be deducted under section 194C not under 194I in case all running and maintenance expenses is incurred by car owner.
If contract is merely for renting car and all expenses are incurred by person who hired car then it would fall under category machinery and then TDS would be deducted under section 194I
A TRINADHA RAO
(Accountant & CA IPCC STUDENT)
(155 Points)
Replied 01 December 2010
TDS Deducted U/s.194C
Indivisul-1%
Co & Firm-2%
Regards
TRINADHARAO
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