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Rent Car

16 February 2024

we used rental car for 2 year rental contract period.Paid rent 30000/- P.M.
In which sec.we deduct tds for car rent. Whether 94 C or 94 I.
If 94 I , then what % whether 2% or 10%

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17 Replies

Saravanan nagaraj (463 Points)
Replied 17 February 2024

TDS 194C for Contract @ 10%

TDS 194I for Rental Property 5℅ or 10%

In your case, you should TDS 194C @ 10%

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CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 17 February 2024

Under Sec 194I , 2% TDS will be deductible.

Refer case of Akshatam Construction LLP vs DCIT

Saravanan nagaraj (463 Points)
Replied 17 February 2024

Thanks for reference case study:

I went through that complete case study article. I couldn't find anywhere 194-1 @ 2%.

Please read it again. If you find it please share it here.

Note:1

It was held that where buses/vehicles were hired for fixed tenure and for its exclusive usage Sec. 194C and not Sec. 194-1 could be attracted.

Note:2

Where assessee State Transport Corporation was making payment on kilometer running basis without any responsibility for running cost, maintenance cost, driver cost etc. Said payment would fall within the ambit of Sec. 194C and not under definition of rent as defined in Sec. 194-1. "

Saravanan nagaraj (463 Points)
Replied 17 February 2024

@ Mr.Rajkumar

1) Is there any specific purpose to opt this rental contract?

2) Rs.30,000/- is it fixed charges paid?

3) is there any specific time and kilometres charges?

4) Pickup and delivery

5) you opt this car specific purpose but it was used for specific purpose or not.

RAJA P M ("Do the Right Thing...!!!") (128096 Points)
Replied 17 February 2024

TDS should be deduct u/s 194I

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sabyasachi mukherjee (27642 Points)
Replied 17 February 2024

Deduct sec 194I. but depending upon the threshold limit

CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 17 February 2024

@ Raja PM, 10% TDS applicable on land & building only.

Rajkumar Gutti (645 Points)
Replied 17 February 2024

Car used not for specific purpose
There is no any kilo meter binding. Tenure is fixed. Remuneration for car is fixed , not depend on running km. Maintainance , driver , fuel cost is all included.If this fall u/s94 I , can treated plant and machinery & rate for tds is 2%

Saravanan nagaraj (463 Points)
Replied 17 February 2024

There are points to clasify this car renting service in the case study.

If there is purpose of opting service and not in specific time period or charges, when it comes pick and delivery or transport on person to another place. Receipient left after purpose solved. It falls under 194C @ 10%

Viceversa, the above. The purpose of opting service of this car with fixed time or amount, or keep the vehicle without time limit and use whenever it needs. It falls under 194I @ 2% as rent plant & machinery based.

For building and land, furniture & fittings falls @ 10%