TDS on vehicle rent / hire

[Hemant Pandit]

Sir,

Whether vehicle taken on rent/ hire require to be deducted TDS u/s 194C or 194I?

Please give case law if possible.

[CAGOPALJI AGRAWAL]

The terms of the agreement would decided the fate. It may fall u/s 194C if the possession remains with the owner and section 194I(a) otherwise.

[CA Rachit Agarwal]

If the vehicle is taken on monthly basis, and fixed rent is paid then it would get covered under Section 194I, however if the vehicle taken on hire is on basis on requirements as when required then it would fall under 194C..

AI Summary

TDS classification for vehicle hire depends on possession and payment pattern; fixed monthly rent treated as rent category.
TDS treatment for vehicle rent or hire hinges on contract terms, possession and payment frequency: episodic hire with possession retained by owner falls under contracting/hire classification, while fixed monthly rent with continuous possession by the taker falls under rent/lease classification.