My client Hired Cars on monthly basis. Please advise under which section TDS will be applicable 194C or 194I
7 Replies
CMA S.K
(Asst. Manager - Finance)
(216 Points)
Replied 01 November 2011
| Originally posted by : chandra sekher agarwal | ||
 |
My client Hired Cars on monthly basis. Please advise under which section TDS will be applicable 194C or 194I |
|
Mr.Agarwal,
On hiring cars, TDS would be levied U/s 194 (i) @ 2%.
Whether the Car service provider is Person/HUF/ corp. rate would be flat 2%.
In addition, you may recommend a 'Rates Contract' between vendor and your company to avoid conflicts of interest.
thanks..
amitmehta_ca
(CA, CMA)
(99 Points)
Replied 02 November 2011
Dear ALL Kindly go throught he circular no. 558 datedd 28th mar 1990
As i have understood the qus as well as the below mentioned circular the terms are quite similar. It is adviced to deduct TDS under 194C.
The matter has been examined in consultation with the Ministry of Law. The Board have been advised that the applicability of provisions of section 194C will have to be examined with reference to the terms and conditions of each contract. In a case where the Board had occasion to examine this issue, the terms and conditions governing the contract between the owner of the buses and the State Road Transport Corporation were, inter alia, as follows :—
(i) The owner of the bus shall give his bus on hire to the corporation for plying on notified routes.
(ii) The owner shall provide a driver, with a valid licence and P.S. Badge for the vehicle supplied by him, who shall follow the instructions of the authorised officials of the Corporation.
(iii) The owner shall make available the bus for 14 hours a day and complete the schedules given to him for the day.
(iv) The owner shall keep the bus road-worthy in terms of Chapter V of the Motor Vehicles Act, 1939 and rules made thereunder from time to time by carrying out necessary maintenance and repairs.
(v) The Corporation shall provide a conductor for the operation of services with necessary equipment for issuing tickets to the passengers as well as luggage.
(vi) The owner shall submit his claim twice in a month, once for the period from 1st to 15th and the other for the remaining part of the month, accompanied by a certificate issued by the Traffic Supervisor of the depot with regard to the distance operated during the respective periods.
(vii) The corporation shall pay the owner at the rate of Rs. .....as fixed cost per day in addition to Rs. .....per km. operated as variable cost, etc., etc.
On the basis of these terms and conditions, the Board have been advised that although the contract may appear to be a single hire contract, it is actually a service contract (for carrying out any work) entered into between the State Road Transport Corporation and the owner of the bus for plying certain buses on certain routes and subject to certain conditions. In such cases, the provisions of section 194C are applicable and tax will have to be deducted at source from the payments made to the private bus owners. It may, therefore, be kept in mind that the applicability of provisions of section 194C in such cases may be considered on merits in the light of the aforesaid observations, and to this extent the clarification given in question No. 5 in Board’s Circular No. 98, dated 26-9-1972 stand modified.
Circular : No. 558, dated 28-3-1990.
amitmehta_ca
(CA, CMA)
(99 Points)
Replied 02 November 2011
Please go through the terms and conditions of agreement. Most preferbly TDS will be deducted u/s 194C.
CA Tarun Jagdish
(8893495263)
(153 Points)
Replied 02 November 2011
am not too sure with the above answer ., Because There is a circular which says if Hotel are taken on a regular basis , then it is under 194J..
Rent as per 194I means any payment by whatever name called for the use of Land Building Machinery etc.
However since law is not clear about it, we can take any stand.. and wait for Judicial pronouncement on it :)
amitmehta_ca
(CA, CMA)
(99 Points)
Replied 02 November 2011
Dear Tarun,
There is specific circular specifying that in such case TDS will be deducted u/s 194C and not 194I. Please refer above.
Regards
Amit Mehta
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