Applicability of TDS on CFS, CHA fees, and shipping line charges
This query is : Resolved
25 October 2025
Dear Sir,
Is TDS liable to deduct
(1) on CFS charges for import, payment made to CHA and original bill is provided by CHA by CFS station company. If yes under 194C?
(2) on Fees Paid to CHA, under which section 194C or 194J?
(3) on shipping line charges, paid to CHA but original invoice is submitted by CHA whereas invoice is generated by freight forwarder.
(4) cha also provide his own company invoice charging for transportation charges from port to factory, container tracking and container loading & unloading .
Pls guide on above scenario listed serially one by one....
Is TDS liable to deduct
(1) on CFS charges for import, payment made to CHA and original bill is provided by CHA by CFS station company. If yes under 194C?
(2) on Fees Paid to CHA, under which section 194C or 194J?
(3) on shipping line charges, paid to CHA but original invoice is submitted by CHA whereas invoice is generated by freight forwarder.
(4) cha also provide his own company invoice charging for transportation charges from port to factory, container tracking and container loading & unloading .
Pls guide on above scenario listed serially one by one....
25 October 2025
(1) TDS on CFS Charges Paid to CHA
If the Container Freight Station (CFS) charges are paid to the CHA, and the original bill from the CFS company (third party) is provided by the CHA to you, the following applies:
When the bill for CFS and reimbursement charges is separate, TDS is not applicable on purely reimbursed amounts, because the CHA is merely passing on a third-party charge and not earning income from it.
When the bill is consolidated (i.e., CHA includes CFS along with his own charges), then TDS is applicable on the entire billed amount under Section 194C, since the reimbursement element cannot be segregated unless clearly identifiable.
If the Container Freight Station (CFS) charges are paid to the CHA, and the original bill from the CFS company (third party) is provided by the CHA to you, the following applies:
When the bill for CFS and reimbursement charges is separate, TDS is not applicable on purely reimbursed amounts, because the CHA is merely passing on a third-party charge and not earning income from it.
When the bill is consolidated (i.e., CHA includes CFS along with his own charges), then TDS is applicable on the entire billed amount under Section 194C, since the reimbursement element cannot be segregated unless clearly identifiable.
25 October 2025
(2) TDS on CHA Service Fees
The CHA service fee is for contractual clearing and forwarding work, not a professional service that requires specialized qualifications. Hence:
CHA services fall under Section 194C (contractual work) and not Section 194J (professional services).
The rate would be 1% if the CHA is an individual or HUF, and 2% in other cases.
The CHA service fee is for contractual clearing and forwarding work, not a professional service that requires specialized qualifications. Hence:
CHA services fall under Section 194C (contractual work) and not Section 194J (professional services).
The rate would be 1% if the CHA is an individual or HUF, and 2% in other cases.
25 October 2025
(3) TDS on Shipping Line Charges Paid Through CHA
When the shipping line or freight forwarder raises the actual invoice, and the CHA merely routes the payment:
If the invoice from the shipping line is in the name of the importer/exporter, and the CHA only facilitates payment, no TDS should be deducted on that portion, as it is a reimbursement.
If the shipping charge is billed by the CHA (without forwarding the original third-party invoice), or is included in a composite invoice, then TDS under Section 194C becomes applicable on the full amount.
When the shipping line or freight forwarder raises the actual invoice, and the CHA merely routes the payment:
If the invoice from the shipping line is in the name of the importer/exporter, and the CHA only facilitates payment, no TDS should be deducted on that portion, as it is a reimbursement.
If the shipping charge is billed by the CHA (without forwarding the original third-party invoice), or is included in a composite invoice, then TDS under Section 194C becomes applicable on the full amount.
25 October 2025
(4) TDS on CHA’s Own Invoice for Transportation, Container Handling, etc.
When the CHA charges for transportation from port to factory, container tracking, loading and unloading, these are separate work contracts executed by the CHA. Therefore:
TDS is applicable under Section 194C (contract for carriage of goods and loading/unloading).
The applicable rate is 1% (individual/HUF) or 2% (others).
Thresholds apply: single payment exceeding ₹30,000 or annual aggregate exceeding ₹1,00,000.
When the CHA charges for transportation from port to factory, container tracking, loading and unloading, these are separate work contracts executed by the CHA. Therefore:
TDS is applicable under Section 194C (contract for carriage of goods and loading/unloading).
The applicable rate is 1% (individual/HUF) or 2% (others).
Thresholds apply: single payment exceeding ₹30,000 or annual aggregate exceeding ₹1,00,000.
25 October 2025
Circular No. 715 (8 Aug 1995), Section 194C(1) and case interpretations reaffirm that reimbursements supported by third-party invoices are not liable, whereas composite bills are fully covered by TDS under Section 194C.
25 October 2025
Sir, In respect of CFS charges and shipping line charges, invoices is in importer name, cha here only make the payment to fright forwarder and CFS company on behalf of importer,
Does it comes within the ambit of reimbursement
Does it comes within the ambit of reimbursement
25 October 2025
Yes, if the amount is same.
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