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TDS on Freight (Income Tax)

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This query is : Resolved



( Author )
07 December 2009

Query

A firm is making freight payments against GR issued by different truck operators. The payments are being made to the drivers on trip to trip basis.
In none of the case GR amount exceeds Rs.20,000/- and the aggregate payment made to each truck during the year is also below Rs.50,000/- and accordingly
no TDS is being deducted.

In few cases the truck operators are member of a Truck Unions and such truck operators are issuing GR of Truck Union, of which he is a member and are mentioning there truck number in the GR. However they are collecting the freight them self.

As per trade practice, such truck operators are not depositing the freight collected with the Union, but are only paying there membership fee to the union. A truck union is having members who own different trucks and operate under the banner of Truck Operator Union.

Please advice whether aggregate amount paid to different truckers operating under one truck operator union will be considered to determine the aggregate amount exceeding Rs.50,000/- or payment made to each truck operating under one union will be considered to determine the limit of Rs.50,000/-.


Anil K Kalia
FCA, Chandigarh


Kishanlal Paliwal

( Expert )
09 December 2009

We have to analyse the case in following way;

1. Whether the risks allied to transhipment is vested with Union, if answer is negative, the GR of the union has no meaning.

2. To whom you are handingover the goods, union or truck owner.

3. If the answer is negative, you have not entered into the agreement with union. The union is just formed as a group of truck owners/operators for carrying their personal interest. They could not lagally bind to party's on other side.

4. If the answer is affirmative, the union could be considered as a party to the contract of transhipment of goods and all statutory provission shall be applicable as in the normal course of the business.

Regards


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