sushant gurav (Accountant) (396 Points)
26 December 2011Sir, 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
CA Garav Gulati
(Management Consultant)
(106 Points)
Replied 26 December 2011
TDS will be deducted on Rs. 175377.
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
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.
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
CA Mudit Agarwal PGDFM,MCP,IFR
(Dy. Manager (Taxation))
(289 Points)
Replied 26 December 2011
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
Ashvin Bhanderi
(ACCOUNTANT)
(59 Points)
Replied 28 December 2011
if contract is made, then deduct tds on rs. 159000 us 194 (c).
if contract is not made, then deduct tds on rs. 159000 us 194(i)
service tax amt. will b excluded.
CAclubindia
