TDS u/s. 194C
This query is : Resolved
Guest
Guest
(Querist)
24 November 2008
Hello Experts
Following is said by circular 715 dtd 8-08-95;
Question 15 : Whether section 194C would apply in respect of supply of printed material as per prescribed specifications ?
Answer : Yes.
Does it mean that if we buy a stationery like invoices challans etc. having company's name printed on it and the same shall attract TDS provisions as said by above que. 15 of the said circular?
Or is there any other circular overiding the above circular?
Thanks
Rohit
Following is said by circular 715 dtd 8-08-95;
Question 15 : Whether section 194C would apply in respect of supply of printed material as per prescribed specifications ?
Answer : Yes.
Does it mean that if we buy a stationery like invoices challans etc. having company's name printed on it and the same shall attract TDS provisions as said by above que. 15 of the said circular?
Or is there any other circular overiding the above circular?
Thanks
Rohit
24 November 2008
24 November 2008
Yes, you have to deduct TDS u/s 194C if you buy printed stationary having your company's name on it.
24 November 2008
the subject is a disputed one. recently the Gujarath High Court in the case of COMMISSIONER OF INCOME-TAX Versus GIRNAR FOOD AND BEVERAGE P. LTD.upheld the Tribunal decision that the supply of printed materials as per the specification is contract for Sale and not service or works contracts and TDS u/s 194C is not applicable.
24 November 2008
What should be seen is that whether the contract is for sale or for job work. If the contract is for sale there will be no tds u/s 194C
25 November 2008
The confusion regarding the deduction of tax u/s 194C and 194I has arisen on account of insertion of new definition of rent u/s 194I .The expanded meaning of Rent now includes even plant and machinery's rental.Thus ,work involving plant and machinery for which TDS was being done u/s 194C now demands that consideration for section 194I should also be given.Deductor get confused regarding the selection of correct provision.Because the rate of TDS also very different, wrong application also hurts deductees.
Simplest example of such confusion is regarding rental of car which was previously being subject to TDS u/s 194 C of the I T Act. However, with effect from 13/7/2006, the term rent has been enlarged to include even motor car. Therefore, when the rental of motor car is done, the payer get confused . Should he deduct the tax under 194C or 194 I ?.
My opinion is that there is great difference between the purpose of section 194 C and section 194I .In my considered opinion,the provision u/s 194C is for deduction of tax on payments for “works contract” or any kind of contractual work assigned to a party. Whereas provision u/s 194I is simply tax on the RENT and does not envisage any kind of work associated with such RENT .
Thus, if a company makes an agreement with a car hire company by which the work of transportation is assigned to such car hire company, the payment is payment for work contract and not for simple rent of car or motor car. In that case , the TDS should be u/s 194C and not 194I of the I T Act.However, if same company hires car without assigning any job under an agreement, such hiring become a simple rent of rental which should be subject to TDS u/s 194I of the I T Act.The principal ,therefore,is to see the essence of such contracts. Is it only rental or a service contract?
Simplest example of such confusion is regarding rental of car which was previously being subject to TDS u/s 194 C of the I T Act. However, with effect from 13/7/2006, the term rent has been enlarged to include even motor car. Therefore, when the rental of motor car is done, the payer get confused . Should he deduct the tax under 194C or 194 I ?.
My opinion is that there is great difference between the purpose of section 194 C and section 194I .In my considered opinion,the provision u/s 194C is for deduction of tax on payments for “works contract” or any kind of contractual work assigned to a party. Whereas provision u/s 194I is simply tax on the RENT and does not envisage any kind of work associated with such RENT .
Thus, if a company makes an agreement with a car hire company by which the work of transportation is assigned to such car hire company, the payment is payment for work contract and not for simple rent of car or motor car. In that case , the TDS should be u/s 194C and not 194I of the I T Act.However, if same company hires car without assigning any job under an agreement, such hiring become a simple rent of rental which should be subject to TDS u/s 194I of the I T Act.The principal ,therefore,is to see the essence of such contracts. Is it only rental or a service contract?
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