TDS on Taxi hire

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Aryan (Querist)
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08 February 2023 Dear Expert,

We hire taxi every month, he gives monthly bill without RCM charges, we pay RCM on that bill, my question about this is now his billing has crossed Rs 1 lac, can we are liable for deduct TDS @ 1% or 2% on his bill?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 February 2023 If Car is hired for purpose of specific usage and charges paid on the basis of such specific uses without bearing running and maintenance cost, then it should fall under the category of contract for services and provision of section 194C will be applicable.
On the other hand, the car is hired not to perform specific services and charges are not paid on the basis of specific uses but the same is hired for the availability of a car for a particular time or period without specification of particular services and charges paid on fixed basis then such hiring should be considered as a rental contract under the provision of section 194I of the Act.
Check your contract of usage.
It seems in your case TDs u/s. 194I will be applicable.