{"id":6478,"date":"2023-11-30T12:08:05","date_gmt":"2023-11-30T12:08:05","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=6478"},"modified":"2023-12-11T08:21:24","modified_gmt":"2023-12-11T08:21:24","slug":"tds-on-car-hire-charges","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/","title":{"rendered":"Section 194C : TDS on car hire charges"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6480\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/TDS.png\" alt=\"TDS\" width=\"800\" height=\"438\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/TDS.png 800w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/TDS-300x164.png 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/TDS-768x420.png 768w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69f4d8426e5f8\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69f4d8426e5f8\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Section_194C_TDS_on_car_hire_charges\" title=\"Section 194C : TDS on car hire charges \">Section 194C : TDS on car hire charges <\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Applicability_of_Tax_Deducted_at_Source_provisions_on_Car_Hire_Charges_under_Section_194C\" title=\"Applicability of Tax Deducted at Source\u00a0provisions on Car Hire Charges\u00a0under Section 194C \">Applicability of Tax Deducted at Source\u00a0provisions on Car Hire Charges\u00a0under Section 194C <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Meaning_of_Car_hire_charges_Section_194C\" title=\"Meaning of Car hire charges: Section 194C \">Meaning of Car hire charges: Section 194C <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Meaning_of_specified_persons_for_purpose_of_TDS_on_car_hire_charges\" title=\"Meaning of specified persons for purpose of TDS on car hire charges?\">Meaning of specified persons for purpose of TDS on car hire charges?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Rate_Amount_for_Tax_Deducted_at_Source_deduction_for_Car_Hire_Charges_us_194C_of_the_Income_Tax_Act_1961\" title=\"Rate &amp; Amount for Tax Deducted at Source deduction for Car Hire Charges u\/s 194C of the Income Tax Act, 1961\">Rate &amp; Amount for Tax Deducted at Source deduction for Car Hire Charges u\/s 194C of the Income Tax Act, 1961<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Time_of_Tax_Deducted_at_Source_deduction_on_payment_of_Car_Hire_Charges_us_194C\" title=\"Time of Tax Deducted at Source deduction\u00a0on payment of Car Hire Charges\u00a0u\/s 194C \">Time of Tax Deducted at Source deduction\u00a0on payment of Car Hire Charges\u00a0u\/s 194C <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#What_is_deeming_provisions_of_Tax_Deducted_at_Source_on_Car_Hire_Charges\" title=\"What is deeming provisions of Tax Deducted at Source\u00a0on Car Hire Charges? \">What is deeming provisions of Tax Deducted at Source\u00a0on Car Hire Charges? <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Celling_for_Tax_Deducted_at_Source_deduction_on_Car_Hire_Charges_us_194C\" title=\"Celling for Tax Deducted at Source\u00a0deduction on Car Hire Charges u\/s 194C \">Celling for Tax Deducted at Source\u00a0deduction on Car Hire Charges u\/s 194C <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Celling_for_Tax_Deducted_at_Source_deduction_on_Car_Hire_Charges_us_194C_is_as_follows\" title=\"Celling for Tax Deducted at Source\u00a0deduction on Car Hire Charges u\/s 194C is as follows :\">Celling for Tax Deducted at Source\u00a0deduction on Car Hire Charges u\/s 194C is as follows :<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Income_Tax_deduction_Exemption_for_limit_under_Section_194C\" title=\"Income Tax deduction Exemption for limit under Section 194C: \">Income Tax deduction Exemption for limit under Section 194C: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#Important_Judgements_related_to_the_Car_hire_for_Section_194C\" title=\"Important Judgements related to the Car hire for Section 194C\">Important Judgements related to the Car hire for Section 194C<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.caindelhiindia.com\/blog\/tds-on-car-hire-charges\/#The_Central_Board_of_Direct_Taxes_Clarification_Circulars\" title=\"The Central Board of Direct Taxes Clarification:\u00a0Circulars\">The Central Board of Direct Taxes Clarification:\u00a0Circulars<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Section_194C_TDS_on_car_hire_charges\"><\/span><span style=\"color: #000080;\"><strong>Section 194C : TDS on car hire charges <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Tax Deducted at Source\u00a0to be deducted on payment made on car hire.\u00a0Tax Deducted at Source\u00a0on car hire charges\u00a0is needed to be deducted u\/s 194C. When a person makes a payment to contractor on a contract, Business owner has to deduct Tax Deducted at Source\u00a0on such payment made for car hire charges.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Applicability_of_Tax_Deducted_at_Source_provisions_on_Car_Hire_Charges_under_Section_194C\"><\/span><strong><span style=\"color: #000080;\">Applicability of Tax Deducted at Source\u00a0provisions on Car Hire Charges\u00a0under Section 194C<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>When there is a contract between a contractor &amp; specified persons and a payment is made to the contractor for undertaking any \u2018work\u2019, a Tax Deducted at Source\u00a0is to be deducted as per the specified rate.<\/p>\n<p><strong>Note:\u00a0<\/strong>A contract between specified persons &amp; a subcontractor will also be liable to Tax Deducted at Source\u00a0u\/s 194C.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Meaning_of_Car_hire_charges_Section_194C\"><\/span><span style=\"color: #000080;\"><strong>Meaning of Car hire charges: Section 194C <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A car hired for a specific purpose at a charges that includes without any maintenance or running cost falls under the purview of Section 194C.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Meaning_of_specified_persons_for_purpose_of_TDS_on_car_hire_charges\"><\/span><span style=\"color: #000080;\"><strong>Meaning of specified persons for purpose of TDS on car hire charges?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A specified person, as per Section 194C includes:<\/p>\n<ul>\n<li>Firm;<\/li>\n<li>Trust;<\/li>\n<li>Local Authority;<\/li>\n<li>Central Govt;<\/li>\n<li>State Govt;<\/li>\n<li>Company;<\/li>\n<li>Co-operative society;<\/li>\n<li>Any State authority responsible for providing housing accommodation or planning or development of cities, towns, etc.<\/li>\n<li>Society<\/li>\n<li>University<\/li>\n<li>An individual, body of individual, association of person or Hindu Undivided Family has total sales, turnover or gross receipts of more than INR One Crore (in case of business) or INR 50,00,000\/- (For Profession).<\/li>\n<li>Govt of a foreign country or a non-resident corporate entity or any other association or body of such foreign State;<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Rate_Amount_for_Tax_Deducted_at_Source_deduction_for_Car_Hire_Charges_us_194C_of_the_Income_Tax_Act_1961\"><\/span><span style=\"color: #000080;\"><strong>Rate &amp; Amount for Tax Deducted at Source deduction for Car Hire Charges u\/s 194C of the Income Tax Act, 1961<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-6479\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/Section-194C-TDS-on-car-hire-charges.png\" alt=\"Sec 194C TDS on car hire charges.\" width=\"678\" height=\"537\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/Section-194C-TDS-on-car-hire-charges.png 610w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/Section-194C-TDS-on-car-hire-charges-300x238.png 300w\" sizes=\"(max-width: 678px) 100vw, 678px\" \/><\/p>\n<p>The rate of\u00a0Tax Deducted at Source\u00a0to be deducted<strong>\u00a0<\/strong>is as under: \u2013<\/p>\n<ul>\n<li>Tax Deducted at Source\u00a0shall be deducted at the following rates U\/s 94C depending on whether the payment is made to an Individual\/ Hindu Undivided Family or other than Individual\/ Hindu Undivided Family:\n<ul>\n<li>Credit\/ Payment is made to a person other than an Individual\/ Hindu Undivided Family \u00a0\u2013 Two Percentage.<\/li>\n<li>Credit\/ Payment is made to an Individual\/ Hindu Undivided Family \u2013 One Percentage<\/li>\n<\/ul>\n<\/li>\n<li>No Surcharge &amp; HEC shall be added to the<strong>\u00a0above-mentioned rates<\/strong>.<\/li>\n<\/ul>\n<p>According to Section 206AB: Tax Deducted at Source @ 20 shall be deducted where the payee does not give Permanent account number to the deductor.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Time_of_Tax_Deducted_at_Source_deduction_on_payment_of_Car_Hire_Charges_us_194C\"><\/span><strong><span style=\"color: #000080;\">Time of Tax Deducted at Source deduction\u00a0on payment of Car Hire Charges\u00a0u\/s 194C<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Tax Deducted at Source needs to be deducted whichever event takes place earlier.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_is_deeming_provisions_of_Tax_Deducted_at_Source_on_Car_Hire_Charges\"><\/span><span style=\"color: #000080;\"><strong>What is deeming provisions of Tax Deducted at Source\u00a0on Car Hire Charges? <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Where the amount is credited to the Suspense A\/c in the books of Accounts of the person who is liable to make payment to the payee, it will be deemed to be credited to the A\/c of the payee &amp; Income tax provisions for Tax Deducted at Source\u00a0on car hire charges will applicable.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Celling_for_Tax_Deducted_at_Source_deduction_on_Car_Hire_Charges_us_194C\"><\/span><strong><span style=\"color: #000080;\">Celling for Tax Deducted at Source\u00a0deduction on Car Hire Charges u\/s 194C<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Celling_for_Tax_Deducted_at_Source_deduction_on_Car_Hire_Charges_us_194C_is_as_follows\"><\/span><strong>Celling for Tax Deducted at Source\u00a0deduction on Car Hire Charges u\/s 194C <\/strong>is as follows :<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Payment should not exceed Rs. 30,000 in case of a single transaction and;<\/li>\n<li>Aggregate payments made during the relevant FY should not exceed Rs. 1,00,000.<\/li>\n<\/ul>\n<\/li>\n<li>In case it exceeds celling, then the TDS rate as provided u\/s 194C will be applicable, i.e., 1% or 2%.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Income_Tax_deduction_Exemption_for_limit_under_Section_194C\"><\/span><span style=\"color: #000080;\"><strong>Income Tax deduction Exemption for limit under Section 194C: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><strong>Amount doesn\u2019t exceed\u00a0INR 30k :\u00a0<\/strong>Where the amount credited\/ paid does not exceed INR 30k in a one single transaction, No Tax Deducted at Source\u00a0shall be deducted.<\/li>\n<li><strong>Non-Resident Contractor:<\/strong>\u00a0In case payment made to a Non-Resident contractor shall not attract Tax Deducted at Source\u00a0u\/s 194C. But, \u00a0<strong>Non-Resident Contractor<\/strong> shall be governed by Income Tax Provisions of Sec 195.<\/li>\n<li><strong>Amount Not exceed in total of\u00a0INR. 1 lakhs:<\/strong>\u00a0Further, no Tax Deducted at Source\u00a0 shall be deducted, where the amount or aggregate of amounts credited\/ paid to the recipient during the Financial Year not exceed INR 1,00,000.<\/li>\n<li><strong>Business of leasing, or Hiring or plying goods carriage:<\/strong> Where contractor owned 10 or less carriages in the PY &amp; a declaration is provided with Permanent account number to the person paying or crediting the amount to the Deductor.<\/li>\n<li><strong>In case the payment made towards Personal Purpose:<\/strong> In case consideration paid by an individual or Hindu Undivided Family is on a\/c of personal purpose, No Tax Deducted at Source is to be deducted on such consideration.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Important_Judgements_related_to_the_Car_hire_for_Section_194C\"><\/span><span style=\"color: #000080;\"><strong>Important Judgements related to the <\/strong><strong>Car hire for Section 194C<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Where Car hire charges are paid without any maintenance or running cost, it will be covered u\/s 194C. (<strong>Akshatam Construction LLP v. DCIT )<\/strong><\/li>\n<\/ul>\n<ul>\n<li>Car was hired for transporting employees &amp; visitors, it will be covered u\/s 194C.(<strong>TATA AIG General v. Income-tax Officer)<\/strong><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"The_Central_Board_of_Direct_Taxes_Clarification_Circulars\"><\/span><span style=\"color: #000080;\"><strong>The Central Board of Direct Taxes Clarification:\u00a0<\/strong><strong>Circulars<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Tax Deducted at Source\u00a0on payment made for\u00a0car hire charges\u00a0shall be deducted on invoice value, excluding the value of GST (if such value is mentioned separately in the invoice) \u2013 CBDT\u00a0 Circular No. 23\/ 2017.<\/li>\n<li>But, Tax Deducted at Source shall be deducted on entire invoice value (if the value of Goods and Services Tax is indicate in invoice separately) \u2013 CBDT Circular No. 23\/ 2017<\/li>\n<\/ul>\n<p>Tax Deducted at Source\u00a0on car hire charges is needed to be deducted u\/s 194C @ 1% or 2% for payments to residents of India.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6489\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/photo_2023-12-11_13-41-05.jpg\" alt=\"Car purchase\" width=\"908\" height=\"1178\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/photo_2023-12-11_13-41-05.jpg 908w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/photo_2023-12-11_13-41-05-231x300.jpg 231w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/photo_2023-12-11_13-41-05-789x1024.jpg 789w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/photo_2023-12-11_13-41-05-768x996.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/11\/photo_2023-12-11_13-41-05-800x1038.jpg 800w\" sizes=\"(max-width: 908px) 100vw, 908px\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 194C : TDS on car hire charges Tax Deducted at Source\u00a0to be deducted on payment made on car hire.\u00a0Tax Deducted at Source\u00a0on car hire charges\u00a0is needed to be deducted u\/s 194C. When a person makes a payment to contractor on a contract, Business owner has to deduct Tax Deducted at Source\u00a0on such payment made &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[100],"tags":[553],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/6478"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=6478"}],"version-history":[{"count":5,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/6478\/revisions"}],"predecessor-version":[{"id":6490,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/6478\/revisions\/6490"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=6478"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=6478"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=6478"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}