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Rate of tds

Kunal Pansari (Accountant) (1037 Points)

23 February 2016

Our Company has availed a transportation service from Greatway Carrying Corporation, for which they had issued us a invoice of Rs. 112130.00. Now we are supposed to make them a the payment after deducting the TDS on the abovesaid amount. But the main confusion is about the rate of TDS to be deducted. Someone told us that we should deducts TDS @ 2% but the transporter insists that TDS should be at 1%.

So what would be the actual rate of TDS?

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12 Replies

anand (Accountant) (32 Points)
Replied 23 February 2016

Sir

You please ask your service provider that whether he is an individual or Hindu undivided family Than it is 1% otherwise it is 2%

Pleses note that

(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,

Kunal Pansari (Accountant) (1037 Points)
Replied 23 February 2016

Thank you for your response.

But the main issue is how do we verify whether it is an individual or non-individual.

The transporter will obviously call itself as an individual for low TDS rate.

Prateek (Partner) (143 Points)
Replied 23 February 2016

For deducting tds @ 1% or 2%, you need the pan of the transporter. Otherwise you have to deduct TDS @ 20%.

Look for the fourth letter of the PAN. Fourth letter of PAN is "I" for individual, "H" for HUF, "C" for company.

Deepak sharma (Learner) (1431 Points)
Replied 23 February 2016

Sorry Mr Prateek, I would like to correct you, Individual PAN contained fourth letter as "P"

Deepak Singh Bisht (Accounts Executive) (73 Points)
Replied 23 February 2016

YES AGREE WITH DEEPAK SHARMA.

Raghavendra (Accountant) (53 Points)
Replied 23 February 2016

AGREE WITH DEEPAK SHARMA.

Tarun Surana (FCA) (23 Points)
Replied 23 February 2016

Agree with Deepak Sharma

Prateek (Partner) (143 Points)
Replied 23 February 2016

Thanks for correcting me sir.

Hoping that my answer will solve mr. Kunal's problem.

CA Jitendra Yadav (Chartered Accountant) (23 Points)
Replied 23 February 2016

If transporter has quoted the PAN, no need to deduct TDS. However if transporter hasn't quoted PAN then rate of TDS shall be 20%.

CS Dhawni Chandan (Assistant Company Secretary at MNC) (9 Points)
Replied 23 February 2016

Please note if the transporter is company and if provides declaration (Notification effective June 2015) of having not more than 10 goods carriers then no TDS, otherwise charge @ 2%.. If transporter is individual or HUF charge @ 1%. For additional info depending on invoice it would also attract reverse charge mechanism @ 25% of invoice value.

valji (Accounts manager-MBA) (2150 Points)
Replied 24 February 2016

if transpeoter having pan and give declaration that they not having more tan 10 vehicle then no tds ,if not having pan and limit exceed rs 75000 then 20%