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Section 194c

Shaurabh Sahu (FINAL STUDENT) (46 Points)

23 June 2015

In Case The Person (Pvt Ltd Company) who is providing the transportation Service is Not the owner of Any Goods Carriage. But he is providing service by hiring Carriages from Individual truck Drivers (Owner). Lorry Receipt is in the name of Company, Payment is also made to the company by service Receiver. Then company pays the amount to Truck Driver. In the above situation who is responsible for Submission of Declaration and whose PAN will be mentioned in declaration form. If Transporter hiring more than 10 trucks whose TDS will be deducted Transporter or Truck Driver (Owner).Please Reply.

Thank you

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7 Replies

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 23 June 2015

As per my understanding

Truck owner has to issue Declaration of not having more than 10 trucks.

TDS to be deducted by a service receiver while making the payment to company ( Here i am also confused)

Let's see other view also.

Rashi Bajaj (CA) (752 Points)
Replied 23 June 2015

The assessee company has to provide PAN and declaration for not owning more than 10 trucks in order to avoid deduction of tax at source. As far as the arrangement between the assessee company and the individual truck owners is concerned, you need to be sure of the nature of transaction. Is it merely hire charges(i.e.rent) or the service is in nature of plying the trucks in their individual capacity. In my opinion, iof only hire charges/rent is paid, the TDS u/s 194I is attracted, else even the individual truck owners need to give you a declaration as mentioned above.

Shaurabh Sahu (FINAL STUDENT) (46 Points)
Replied 23 June 2015

My queries are

1) If transport agency having more than 10 vehicle from different truck owners and he provides service of transport to Mr X (Assumed), a Businessman for plying goods. Whose tax will be deducted by Mr X, Transport agency or truck owners.

2) From whom Mr X will take declaration? transporter or Truck owners?.

3) Whose PAN will be mentioned in Declaration form Transporter or Truck owners

Z ( ) (2960 Points)
Replied 24 June 2015

I concur with Rashi Bajaj's Answer

Private Ltd. Co. should give declaration to the clients

That individual (owner of trucks)should also give declaration to the Private Ltd Co. [If the nature of the business is transport]

Otherwise 194-I for contract between individual (owner) and the Private Co.

(other views welcomed)

Gowtham (Student) (1174 Points)
Replied 24 June 2015

Quoting 194C(6)........

(6) No deduction shall be made from any sum credited or paid or likely to be 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, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum.

Note : Ownership of the goods carriages is a essential precondition for emanciptating the contractor from TDS deduction .

Conclusion : In your case the company being the contractor and since it doesn't own any carriage can't avoid TDS liability. It should necessarily suffer TDS.

1 Like

Rashi Bajaj (CA) (752 Points)
Replied 24 June 2015

I beg to differ with Gowtham's conclusion on the ground that, although the company does not own any trucks, it is still in the business of plying trucks on hire. Hence Mr. X in your case does not have to deduct TDS of the company if declaration and PAN is provided.

1 Like

Ashok (none) (26 Points)
Replied 28 July 2015

My query is that a trader hires trucks from open market i.e. without interferance of transport agency what would be liaility of trader re sec 194 c .

2. A driver used to come to traders shop or godown not the owner of truck. Who will give the declaration or PAN .

3. When pan card is given why the burden of proffing is over trader ,why the burden of TDS over trader. Truck drivers say they wont do carriage work for you.

The Govt. should abolish two rates . When PAN is given no tax is to be deducted than who is supposed to pay the lower rate ot TDS

4. why not it is made mandatory for transport authority to mention the PAN number on owner book itself.

May i have aproper guide line.

Ashok