Gyana Mishra (Service) 02 April 2008

TDS on Car Hire

Hi, I wish to know that if a company enter into a contract of 2 year of hiring a car (Rs.3 lakh per year) for office use. Is the company liable to deduct tax while making payment to party as per 194 I (TDS on Rent of Machinery as car is a part of mechinery, I believe) or tax should be deducted as per 194C (TDS on Contract for service) - Thanks, Gyan

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9 Replies

shiva shanker (Legal Officer) 02 April 2008

Hi Mr. I am not expert in the present issue, but as per my reliable information the Employer will pay u the amount after deducting the tax amount.

Guest (n/a) 02 April 2008

Hi..mr.yes company is liable to deduct TDS under sec 194C.car is not a part of machinery.

Atul Kumar (CA) 02 April 2008

TDS should be deducted as per Sec. 194 I.

DEEPAK MALHOTRA (PROFESSIONAL) 02 April 2008

yes ,the company would deduct a tds at the rate of 2%+surcharge+educationcess

Gyana Mishra (Service) 03 April 2008

Thanks, Atul, I think you are right.

Subodh K Tewari (Income-tax & Civil Laws) 04 April 2008

Yes. Atul is right - 194 I and rates are 15 % for payment to Individuals & HUF otherwise 20% (ofcourse +SC if applicabe and EC@3%)

Subodh K Tewari (Income-tax & Civil Laws) 05 April 2008

sorry, the rate u/s 194 I is now 10%

Rajiv (Service) 05 April 2008

Dear Friends Rate Applicable here is U/S 194C rate Applicable to Contractors and not rate applicable to renting property.

V Ramanujam (Service) 30 May 2008

Though the exact nature of 'agreement' need to be looked into, from the details given, I feel that the TDS applicable would be under Sec.194I at the basic rate of 10% (with Surcharge/cess as applicable). In addition, I am of the view that the transaction would attract tax under the VAT provisions also, if it is entered into in the nature of 'lease transaction'.