tds u/s 194i

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CA Abhash

Chartered Accountant

324 Points Joined March 2007

one of our client has taken photostat machine on rental basis from photostat shop, kept at place of client. the only consideration being paid is in the form of a fixed charge, say 0.25 piase per copy for photostat and the material being paper sheets is being fed in the macine by the client. my question is

1) does this attract tds under 194I as rent for equipments or u/s 194C as tds on contract.

2) if we fall in definition of rent u/s 194I, then if our liabilty does not arise due to payment does not exceeding 120000, then are we covered u/s 194C as residual section or there does not arise any tds liabilty in that case.

Replies (3)

CA Anil Jain

Chartered Accountant

696 Points Joined November 2007

I think it is covered under sec.194C bcoz there is no fixed charges per month. if we have to pay all exp. relating to contract like as u said 0.25 per copy it is in the nature of contract.It can't be treated as rent agreement. so if any single payment exceed rs.20000 and aggregate rs.50000/-in the f/Y then u hav to deduct TDS at the rate of 2%+10%(if Appl)+3%i.e.2.065 or 2.2266 as applicable.

CA. O.P. Agarwalla

C.A.

2916 Points Joined November 2007

Mr. Abhash, Your query is interesting one. Section 194C applies in case of woks contract. Now, in your case, is there any work is being carried out by the machine owner? Or, he has simply transfered the right to use to you on rent which is based on the basis of utilisation? In other words, if the machine is operated by your client, this case is out of the ambit of section 194C. And if it is so, section 194I will be applicable. I am of the view that for section 194C, execution of work is must, whereas for section 194I transfer of right to use is must.