Dear All,
Will TDS be deducted on fixed monthly payment made for hiring of vehicle ?
Regards,
Varun
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
Var
(28 Points)
Replied 10 May 2007
Dear Harsh,
Whether the amendment bill has been passed ?
Regards,
varun
Whether the amendment bill has been passed ?
Regards,
varun
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
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.
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.
anand
(professional)
(122 Points)
Replied 25 January 2008
yes TDS is attracted when the total Payment exceeds Rs 50000 in a F.Y
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?
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