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Urgent response - tds if bus hired for trips from state transport corporation

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Rajeshwar Devarakonda

28 Points Posted on 15 November 2018

We plan to hire buses from State Transport Corporation - they would instead of Selling tickets, provide us the whole capacity of the bus by extending their existing service route. We will have this for three rounds - 35 seats every trip

The STC is saying TDS is not applicable. My Finance is saying TDS is applicable. In a Catch 22. Urgent response required please.

Replies (2)

Sudarshan Sarda

CHARTERED ACCOUNTANT

171 Points Posted on 15 November 2018

AS STATE TRANSPORT CORPORATION IS GOVERNMENTAL COMPANY,

NO REQUIREMENT TO DEDUCT TDS

Nitesh bind

Student CA Final

2880 Points Posted on 20 November 2018

There is a very close gap between 194C and
194-I and here the transaction is in the nature of Renting of Plant & Machinery and NOT of giving contract for Transportation.

If the STC would have operated the Transportation service itself then it would have been covered by 194C and then there would have been NO TDS (sub to certain condition).

But here the STC is simply renting out the buses to you for certain period and therefore here 194-I would be applicable and if payment exceeds the threshold then would certainly be TDS Deduction.

Therefore, In your case TDS WOULD BE DEDUCTIBLE subject to threshold.