LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

TDS on Hiring of Bus Taxi

GAURAV BANSAL (STUDENT) (83 Points)

28 March 2011

hi friends please help me ..........

COMPANY HAS PAID BUS AND TAXI HIRE CHARGES TO A PARTY ?

TDS SHOULD BE DEDUCT UNDER WHICH SECTION 194C OR 194 I ....

PLEASE GIVE PROPER EXPLANATION WITH ALL CIRCULER REFRENCES.......?

Reply
Follow
Share

20 Replies

Sravanthi (CA Final ICWA Final & M.B.A) (737 Points)
Replied 28 March 2011

According to Sec 194C it is not a contract. Sec 194I(Rent) is also not apllicable to this Situation. Subject to my knowledge TDS is not Deduct in this situation.

Regards

Sravanthi

Devendra (Chartered Accountant) (4775 Points)
Replied 28 March 2011

If there is a contract between you and the Taxi cab, then Tds to be deducted u/s 194C, but if it is hired then TDS to be deducted u/s 194I.

Regards,

Devendra

Priyanka (study) (259 Points)
Replied 28 March 2011

I think TDS should be deducted u/s 194C, if the amount of single contract exceeds Rs.30000/- or Rs. 75000/- in aggregate in one year @ 2% in case of other than indivisual HUF & 1% in case of indivisual & HUF

Have a look at the following :

Any person responsible for paying any sum to any resident contrctor for carrying out any work under a contract shall deduct income tax at the rates specified.

Meaning of Work {Clause (iv) of Explanation (iv) to section 194C(7)}

Work shall include -

1.Advertising

2.Catering

3.Carriage of goods or passengers by any mode of transport other than railways

Correct me if Im wrong please.

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 28 March 2011

Section 194C also applies when a plane or bus or any other mode of transport is chartered .

And regarding applicability of 194I applies only when any payment made on account of lease, sub lease ,rent in respect of Land building, machinary, plant, furniture, equipments etc. hence from above it would not be good to consider vehicles as a plant & machinary or equipments etc.

Hence 194I is not applicable.

TDS is to be deducted under section 194C

Regards

Madhusudan Kabra

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 28 March 2011

agreed with priyanka ....

not agreed with you devendra

Regards

Madhusudan

GAURAV BANSAL (STUDENT) (83 Points)
Replied 28 March 2011

hey priyanka thanks

but if u r saying that tds should be deduct u/S 194 c.....

then according to section 194I read with section 43(3) of income tax act ............. what would be your answer ..................

i think tds should b deduct u/s 194 I

AND THERE IS VERY BIG INTRICACY.

HEY FRIENDS REPLY ASAP

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 28 March 2011

Dear gaurav ,

I suggest you to refer defination of rent given under section 194I

Defination given is as follows:

rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee;

hope it is clear to you now.

Source :https://www.incometaxindia.gov.in/acts/income%20tax%20act/194-i.asp

Regards

Madhusudan

GAURAV BANSAL (STUDENT) (83 Points)
Replied 28 March 2011

@ Madhusadan

i am not talking about rent for land and building and appurtrenant therto .. i am asking for rent for plant & machinery

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 28 March 2011

@ gaurav : as far as my knowledge is concern section 43(2) is concern with inclusion & exclusion of certain things in the term "plant" for the purpose of Business & profession. Here this explanation might be given for Classification of assets for Depriciation Purpose not for any other purpose.

I thik explanation given in 43(2)& (3) should not be considered as base for deducting TDS.

i will try to give you more clarification on above topic

Regards

Madhusudan

Ritesh Jain (CA, CS in Job) (675 Points)
Replied 29 March 2011

Dear all members,

It is a very interesting issue and you will find more than 50 posts on the similar issue in CCI only.

TAXI hiring or contract...???? 194C or 194I..????

This is most confusing situation one often face..even i faced it too.. after much search and headchurning discussion it got cleared to me...

i) Reading of text quoted in referred section i.e 194 I or 194 C is not a riding clause to decide the nature of TDS in this particular case.

ii) It is totally governed by the essence of contract..now question comes how??

YES.

If the contract terms stipulate that TAXIS are taken in such a way for a particular period and not case to case basis and any defect maintainence is borne by us.. the use of taxi FOR THAT period is exclusively for us.. the trems of payment are not on KM bais and the terms shows that for that period i have right to use the asset as per my will then it can be said as rental agreement OTHER THAN this one can say it as a contract and deduct TDS u/s 194c.

Generally it is seen that TDS is deducted u/s 194c only beacuse the terms of contract can easily be read as that it is a contract obligation instead a rental agreement.

Regards,