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Vehile hire charges-section 194c or section 194i ?????

CA Abhishek Singh (practice) (2105 Points)

04 November 2013

Hello everyone,

one of my client has paid Rs.500000 to a company providing vehicle services for transport of equipments required for shooting.

I am not sure whehther Tax will be deducted under section 194c-contractors or Section 194I-rent ( vehicle hire charges).

waiting for the clarfification from experts.

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4 Replies

VIKASH KUMAR JAIN (Audit Executive) (711 Points)
Replied 04 November 2013

If service of transport were provided by company as a whole then TDS needs to be deducted @ 2% on Rs. 5 lac on the date of invoice itself.This transaction is liable to TDS u/s 194C.On the other hand if vehicle is taken on hire then it will be liable to TDS deduction u/s 194I @ 2% on invoice date.further its need to be noted that Service tax portion needs to be excluded from bill amount while deducting TDS u/s 194I.

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Mihir (Wealth Manager) (5293 Points)
Replied 04 November 2013

Deduction should be u/s 194C at 2% for company or 1% for individuals.

KR Biju (na) (21 Points)
Replied 07 November 2013

If the company is a purely a transporter and has a valid PAN then there is no need to deduct the TDS as transporter who has a valid PAN is exempted from TDS. Thanks - Biju Rajan

Mohan (Accounts Mgr) (209 Points)
Replied 08 November 2013

(i) If Your company (Deductor) has entered with a Lumpsum Contract and the transport of the Equipment is a part and parcel of that Contract you have to make TDS U/s 194C @ 2% since the Deductee is a Company.

(ii) If Your Company has take the Vehicles on Lease / Hire , the Deductor is liable to make TDS U/S 194I @ 10%.

(iii) If your Company has received service from the Transport Contractor for goods supply, you can hold the PAN copy of the Transporter, Transport Service agreement and get a declaration from the Transport contractor that " I have valid PAN and no need to make TDS".

still wait for experts opinion also.