Payments made for transport of goods or passengers are specifically included in sec.194C
But an agreement provides for minimum guaranteed amount per day which entitles use of vehicle upto 100 km for transport of goods & passengers. Excess milage used is chargeable per km basis.
In such scenario, a company may pay minimum guaranteed amount even though vehicles has run, let us say 50 km in a day. Whether in such scenario TDS is attracted u/s 194C or 194I
TDS Rate Clarification: Section 194I Applies for Vehicle Rentals; Section 194C for Transport Services with Minimum Guarantees. A query was raised regarding the applicable TDS rate under sections 194C and 194I for payments made for the transport of goods or passengers. The scenario involves an agreement with a minimum guaranteed payment per day for vehicle use up to 100 km, with additional charges for excess mileage. The response clarified that if the vehicle is under the company's control, it constitutes renting, making section 194I applicable. Otherwise, section 194C applies, even if a minimum guaranteed amount is paid. (AI Summary)
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