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Tds on transportors

Narayana Malleesh (Student CA IPC / IPCC) (45 Points)

01 December 2015

i am auditing a food prociessing company and the company has obtained transport service from a transporter who in his decleration has said he owns less than 10 vehicles but he engages more than 10 vehicles by hiring them from another transporter nearly 30

the company has not deducted tds on the basis of decleration .

my doubt is whether the crompany shall deduct tds u/s 194c ?

as per 44ae of the act the transporter must own less than 10 goods carriages and is engaged in the business of hiring plying and leasing of goods carriages ..does the nature of service provided by the transporter fall under hiring of vehicles to the company ( which he hired from another transporter) and

is the company required to deduct tds in this case ?

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8 Replies

CA Goutam Sharma (Chartered Accountant in Practice) (468 Points)
Replied 01 December 2015

44AE recognise the No. of vehicles owned by the assessee for the purpose of deemed income of Fleet Owners. It has nothing to to with TDS provisions. The TDS provisions for transporter is that if the transporter provides PAN no. then No deduction is to be made.

These provisions are separate and do not mix them. In your case the company is not required to deduct TDS

Even the new provisions alos Highlight the importance of OWNING. Owning a Vehicle is altogether different from Engaging a vehicles

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 01 December 2015

The provisions of 194c has been ameneded wef 1.6.2015 where it clearly states where transport operator owns 10 or less goods carriage and furnishes a declaration then tds u/s 194 c need not be deducted. Hiring them from other transporters doesn't alter the position as long as he owns 10 or less goods carriage at any point of time during the previous year.

Mohammad Firoz (Article trainee) (50 Points)
Replied 02 December 2015

In the Budget for 2015-16 certain changes have been announced to section 194C of the Income Tax Act, where details have been provided for TDS rates to be applied for payments to transporters, those engaged in plying. hiring or leasing of goods carriages. As per the existing provisions contained in sub-section (6) of 194C, no TDS shall be deducted from any sum credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, when he furnishes his PAN, to the person paying or crediting such sum. This sub-section (6) has been amended so that no TDS shall be deducted from payment made to person mentioned above where such a contractor owns ten or less than ten goods carriages at any time during the previous year and furnishes a declaration to this effect along with his PAN, to the person making the payment to him. The amendment is effective from 1st June 2015. Therefore to avoid TDS (under section 194C) – 2 conditions to be fulfilled – (a) owns 10 or less than 10 trucks AND (b) submits PAN to the person making the payment.

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