TDS on income of Hired / Rented Vehicle used for goods and staff in same vehicle.

Dear Sir,

We are a Local Authority and one of our vendor Provides us transportation service of our staff and transportation of goods in the same vehicle on contract basis . We often take service of such type of vendors for this activity. At Present we are deducting TDS at the rate 10 % on taxable amount from the payment of these vendors under Income Tax Act 1961 and section 194(IA) along with this, We deduct TDS GST (CGST @ 1% and SGST @ 1%) for GST Registered Vendors. This Vendors CA contacted us and gave information that the TDS Duduction rate is to be at the rate 1% (for Proprietor) & 2% (for Firm or Company)as per Income Tax Section 194(C) he also suggest to raise all the future Bill to the Best respective Depot in RCM form . In this context We request you to Clarify the above matter and guide us about TDS Deduction percentage and Income Tax Section Under which this TDS should be deducted. Also guide us about raising bills in RCM form Please.

Thanking you.

Anand V Mhetre