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TDS on hiring of vehicle

Var (28 Points)

10 May 2007

Dear All,

Will TDS be deducted on fixed monthly payment made for hiring of vehicle ?

Regards,

Varun

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22 Replies

Harshavardhana (22 Points)
Replied 10 May 2007

yes in light of amendment made by bill 74 of 2005 introduced by FM any hiring above 120000/- is liable for TDS u/s194I

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Var (28 Points)
Replied 10 May 2007

Dear Harsh,

Whether the amendment bill has been passed ?

Regards,

varun

Harshavardhana (22 Points)
Replied 10 May 2007

yes on 12/05/2005 it has been passed unanimously

Rinit (25 Points)
Replied 10 May 2007

my opinion is that vehicle hiring will be considered as contract
so rule of -- Rs.20,000 or more payment in one contract or
-- Rs.50,000 or more payment in a financial year will apply for deduction of TDS

Vk Duggal (320 Points)
Replied 18 May 2007

TDS on the hiring of machinery, equipment etc. (including is subject to TDS u/s 194-I with effect from 13.07.2006. The amendment was finally passed as Taxation Laws (Amendment) Act, 2006 and not with effect from 12.05.2005. The amendment passed on 12.05.2005 did not came into effect all until 13.07.2006.

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Chitra Chandrasekharan (82 Points)
Replied 31 May 2007

Fixed monthly payment in excess of the specified limit will be liable to TDS either under section 194C or 194I depending on the facts: If only the vehicle is hired, then it will be covered u/s 194I. However, if the contract is for carriage of passenge/goods, then it would come u/s 194C as the deifniition of work in Explanation to section 194C provides that the expression 'work' shall also include carriage of goods and passengers by any mode of transport other than railways. Therefore it may be contended that the contract of vehicle hire is essentially a contract for carriage of passengers and liable to TDS u/s 194C.

KISHAN JAISWAL (PRACTICE) (23 Points)
Replied 12 June 2007

I am quoting below CBDT's instruction dated January 25, 1981 relating to Hire Purchase transactions: [It is a contract whereby the owner delivers goods to another person upon terms on which the hirer is to hire them at a fixed periodical rental. The hirer also has the option of purchasing the goods by paying the total amount of the agreed hire at any time or of returning before the total amount is paid. What is involved in the present reference is the real nature of the fixed periodical rental payable under the hire-purchase agreement. It may be pointed out that part of the amount of the hire-purchase price is towards the hire and part towards the payment of price.] TDS is sure deductible on the payment of hire charges. Now the question is: Section 194C or 194I? Does a Car fit into any of the items mentioned in the Explanation introduced below Section 194I w.e.f 13.07.2006? Could car be treated as plant, especially now that Car and Plant constitute the same block of assets for the purposes of Section 32 and appear cheek by jowl under heading III "Machinery and Plant" in the Appendix I to the Income Tax Rules? As per various judicial rulings, "plant" is not confined to apparatuses used in a mechanical or industrial process to produce articles or things. Any movable or fixed, live or dead object used by a businessman to carry on his business more advantageously has been held to be plant. In view of the above, I think TDS on hire charges of vehicles should be deducted u/s 194I.

(Guest)

Dear All, Will TDS be deducted on hiring of vehicles if the payment is on daily basis but the total payment exceeds 50000 in a F.Y

Irshad (Article) (1426 Points)
Replied 22 January 2008

Please reply in detail...

anand (professional) (122 Points)
Replied 25 January 2008

yes TDS is attracted when the total Payment exceeds Rs 50000 in a F.Y

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(Guest)

For deduction of TDS on Vehicle hiring what is the limit above 20,000/- in a Yr. or above 50,000/ in a yr.

(Guest)

21 students get admission in Technical Institute for ITI training with the support of our organisation @ Rs.8000/- per student. including their food & lodging.should I go for TDS deduction ?

Please advice

NIRAL

Richa (CA) (63 Points)
Replied 01 August 2008

Dear Var

I agree with Harshvardhana. In case of fixed monthly payments towards car hire tax is to be deducted u/s. 194I Equipment Rent. Whereas in case if car is hired on random basis and no fixed price/rate then it shall fall u/s. 194C contract

CHITRA SRIRAMAN (MANAGER - ACCOUNTS) (32 Points)
Replied 05 August 2008

We are engaging 2 Vehicles with driver (driver is the owner for that vehicle). One vehicle - Rs.12000 & another Rs.10 k per month. Fuel we are filling. No maintenance charges paid. We are treating the same under contract and deducting Rs.2.06% from their monthly payment. is it correct?