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TDS query

manik (ca in practice) (420 Points)

23 November 2011

we are hiring tractors at the site to move the material at fixed monthly rate of.14000(including tractor operator salary). we are providing only deisel for the tractor. my question is whether the payment made falls under 194-I or 194-C. please advice

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8 Replies

GHANSHYAM DAS MITTAL (CA Article) (44 Points)
Replied 23 November 2011

In my opinion TDS should be deducted under sec 194 I (TDS on Machinery Rent)

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Shah Tarun (Student) (800 Points)
Replied 23 November 2011

Plz visit following post:

/experts/tds-u-s-194c-194i-572930.asp

2 Like

manish sharma (ca final) (110 Points)
Replied 23 November 2011

This is fall in S-194c contractor.

shyam (student) (26 Points)
Replied 24 November 2011

Dear Minik,

you can consider this in two ways:-

1. Treating it as Freight and no need to deduct TDS (after getting PAN details)

2. Considering it as contract 194C (fixed monthly expenses-operator salary)

194I will not applicable because the main purpose of hiring it to transport / move the goods not having intention to hire the machinery.

manik (ca in practice) (420 Points)
Replied 24 November 2011

basically we are using the tractors within the site premises to shift material from one place to other within site premises.the payment we are making is for the tractor along with the operator. we are only providing them deisel for running.the maintainence liability is of truck owner. then under which sec. it should fall??

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GHANSHYAM DAS MITTAL (CA Article) (44 Points)
Replied 24 November 2011

Fixed Monthly Rate of Rs. 14000/- clearly shows that its a monthly commitment.

Now, tractor if we refer to the provisions covered in depreciation is a machinery as per IT Act.

On a combined reading of both it can be said the machinery is hired on rent & hence TDS should be deducted u/s 194I.

Further the rate of TDS in case of a corporate assessee in either case (i.e. 194 C or 194 I) would be the same 2%

But in case of non-corporate assessee it would be safe to deduct TDS u/s 194I

shyam (student) (26 Points)
Replied 24 November 2011

It is better to deduct Tds U/s. 194C @ 1% for individual and 2 % for others. Since Hiring of tractor along with driver 194I will not applicable it seems.

Ravinder (Independent ) (82 Points)
Replied 26 November 2011

(A) It is better to Deduct TDS U/s 194-C if Tractor is use for Transport / move material only and all repair is borne by actual owner likewise repair & spares......Then it shows the first party is giving only his services and moreover aggreement between both parties should be examine.

(B) It attracts TDS U/s 194-I if Tractor is tottaly hired and all repair & spare's expenses are borne by company. It shows that company has hired the tractor for a final term period and paying fixed amount rather we can't treat Tractor a machinery.