TDS applicability on Printer rental charges

[Ramanathan Seshan]

Dear Experts,

Could you please advise on the applicability of TDS under the relevant section for the following transaction?

ABC Ltd. rents a digital copier cum printer from XYZ Ltd. The terms of the agreement are as follows:

1. Monthly rental fee: Rs 5000 per printer (includes 10,000 free A4 copies)

2. Additional copies: Rs 0.75 per copy for any prints beyond the free allowance

For the month of March 2025, ABC Ltd. uses the printer to print 20,000 A4 sheets.

Please advise on the withholding tax (WHT) applicability under the relevant section, considering the following scenarios:

a) If a single invoice is raised for the entire transaction.

b) If two separate invoices are issued—one for the rental charges and another for the printer usage charges.

Kind regards,

S Ram

AI Summary

TDS on equipment rent: rent treated under rent provisions, per copy overage may attract fee withholding when separate.
Fixed periodic charges for provision of the copier/printer are characterised as rent for equipment and fall under Section 194-I, while additional per copy charges beyond an agreed free allowance are prima facie service fees falling under Section 194J unless the contract or substance treats them as part of the rental. Whether invoiced together or separately, each element should be identified and taxed according to its legal character, subject to examination of contract terms, the supplier's activity, and any applicable exceptions.