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Tds

sushant gurav (Accountant) (396 Points)

26 December 2011

Sir, We are a partnership firm . We have hired some machinery for a excavation , loading and unlaoding.

Now some of them have billed us in the following manner.

Machinery Hire Charges 1,50,000.00

Operator Allowance 9,000.00

1,59,000.00

Service Tax @ 10.3% 16,377.00

Total 1,75,377.00

Less : Diesel provided 9,488.00

1,65,889.00

Now my question is on which amount TDS is to be deducted . Pls clarify

Thanks

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18 Replies

CA Garav Gulati (Management Consultant) (106 Points)
Replied 26 December 2011

TDS will be deducted on Rs. 175377.

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CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 26 December 2011

Sushant ji,

TDS will be deducted on above case on Rs.1,75,377/- as correctly said by CA. Garav Gulati.

Hemant Kumar (Accounts Manager MBA (Fin) CMA*) (6450 Points)
Replied 26 December 2011

TDS Deductible is on Biiled Amount. If Party had given the Bill or invoice to you then deduct tds amount on gross payable amount. i.e. 175377/-

Because you have recoreded some amount already paid and some payable to him in the event of Rent on Machinery.

So You should must to deduct 2% TDS on Amount of Rs. 175377/- u/s. 194I.

vishnupriya (CA Final) (1418 Points)
Replied 26 December 2011

first of all tell me under which section the TDS is made?

Under 194 C or 194 I?

because there is lot of confusion on this type of problem.

If you pay under 194 C, the department will say 194 I and vice versa

I too had a doubt, Please clarify..

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 26 December 2011

I thnk it ll b deducted on1,59,000 in acccordance with the circular issued by CBDT, which states, in case of TDS u/s 194-I, TDS is to be dedcuted on amount excluding service tax component.

Plz correct me if m wrng.

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Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 26 December 2011

CBDT circular can be viewed from the following link:

https://www.fam-is.com/Incometax_forms/CBDT%20Circular%20on%20194I.pdf

vishnupriya (CA Final) (1418 Points)
Replied 26 December 2011

Sumit is right!

If the TDS is made U/s 194 I, the TDS is made on "Income by way of rent"

So, the TDS U/s 194 I will be on 150000/-.

But you have to clarify whether there is any contract element.

CA Garav Gulati (Management Consultant) (106 Points)
Replied 26 December 2011

agree with sumit,

actually I overread the word Machinery Hire charges which comes under 194I. TDS will be deducted on 159000/-

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 26 December 2011

Here in the bill service tax is charged on Rs.1,59,000/- (rent + operator allowance). So, machinery + labour is hired.

Therefore, TDS will be deducted on bill (Rs.1,59,000/-) inclusive of service tax u/s 194 C @ 2%.

And if go by circular (which only states about the rent & not about the labour service) then TDS will be deducted on Rs.1,50,000/- (only on rent) & not on Rs.1,59,000/- u/s 194 I.

Please correct me if I'm wrong.

vishnupriya (CA Final) (1418 Points)
Replied 26 December 2011

Yes !

Now I agree with you Ketan!

I am also confused of those operators charges, if the work as a whole is done under the direction of contractor, then the TDS should be deducted U/s 194 C

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CA Mudit Agarwal PGDFM,MCP,IFR (Dy. Manager (Taxation)) (289 Points)
Replied 26 December 2011

I want to draw the attention towards the CBDT circular no 4 dated 28.04.2008 vide which it has been clarified that tds on any amount paid u/s 194I, is to be deducted on the amount of rent with out includng the service tax. The text of circular can be reached by following the link below........ https://www.fam-is.com/Incometax_forms/CBDT%20Circular%20on%20194I.pdf Hence, TDS is to be deducted on the amount of Rs. 149512 (165889-16377). Since we have provided the diesel, then tds is not be deducted on that amount also..

CA SANKET AGGARWAL (Professional Consultant) (139 Points)
Replied 26 December 2011

Hi All,

I think there is difference between Hire Charges and Rent.

Rent belongs to series of payment for a underline asset for a continious period and the Hire Charges are payment for works we require time to time but not on routine basis.

For Example

Rent - We Hire a cab at Rs. 50000 per month.(Section 194C)

Hire Charges - Paid by us time to time for a Cab Service Provider whose cab are fixed at rate of 1000/day,whenever we require.(Section 194 I)

So first we have to decide this is Rent or Contract work.

If it comes under 194 C then at full amount ie Rs.175377

If it comes under 194 I then at Rs. 150000