TDS on Car hire charges

This query is : Resolved

KOUSHIK (Querist)
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12 June 2008 We are hiring vehicle for our office from travel agencies on monthly basis. Generally, we deduct Tax from the gross bill u/s 194 I. But, very recently we have got instruction to deduct tax for the same @2.266%, i.e TDS u/s 194C. So, please tell me whether tax for vehicle hiring to be deducted u/s 194I or 194C.

nilesh gupta

nilesh gupta (Expert)
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12 June 2008 this activity are contractual nature and covered under section 194C and are liable to deduct tds @ 2.266%.
becoz hiring vehicle is a conract from travel agency, travel agency are contractor.