Would be deducted under 194C....!

TDS shall be deducted u/s 194 C

rent for machinery is under 194I.

As per Section 194 C, the definition of work includes the follwing:

“work” shall include—

        (a)   advertising;

        (b)   broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

        (c)   carriage of goods or passengers by any mode of transport other than by railways;

        (d)   catering;

        (e)   manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,

 but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.

So as per (c) the TDS should be deducted @ 1%(if contractor is individual)/ 2 % (if the contractor is company)

Tds shoul be deducted u/s sec 194 C as bus is under the possetion of Contractor through Drived & Connductor. There is no hire o f bus is involved as the control & possession is owned by the contractor & there is no professional & technical service is involved as per sec 194J. So Tds should be deducted u/s 194C.

194 (I)

TDS SHOUULD BE DECUCTED UNDER SECTION 194-C HIRING OF MOTOR CAR IS COVERED UNDER THE DEFINITION OG WORKS CONTACT FOR CARRYING THE PASSENGER... NOT IN 194 I AND 194 J

TDS SHOULD BE DEDUCTED AT 1%IF PAYMENT IS MADE TO INDIVIDUAL OR HUF,OTHERWISE IT SHOULD BE 2%.

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.

Thanks Amit for the CBDT Circular.

It comes under 194 I @ of 10%. Its specific for hire charges so go for 10% under 194 I

TDS to be deducted under 194 C ( contractor head)