Freight Payment

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This query is : Resolved

Piyush Jain (Querist)

24 September 2009 Dear Professional Colleagues,

I have a client, who hires trucks from Truck Union which is the body which governs the small truck operators. The small truck operators provide the service on the consignment note of Union and the client deduct TDS and pay service tax accordingly to Union as the billty is of Union.

While making the payment, payment is made to individual truck operators instead of Union. Is there any issue/liablity b raised in future on account of statuory obligation.

Ram Avtar Singh

Ram Avtar Singh (Expert)

24 September 2009 Truck operator hired by union leader its a very comon things. no need to panic. take it easy

K V Subba Rao

K V Subba Rao (Expert)

24 September 2009 Please check the following two links:

(1) https://www.taxguru.in/income-tax/icai-procedure-for-appointment-of-branch-statutory-auditors-in-public-sector-banks-psbs-for-the-year-2008-09.html

(2)https://law.incometaxindia.gov.in/TaxmannDit/DispCitation/ShowCit.aspx?fn=https://law.incometaxindia.gov.in/DitTaxmann/Notifications/IncomeTaxAct/2009/Not28_2009.htm

In the light of above, a clear view could be taken only on the strength of full facts such as-who accounts for income, what is the sharing arrangement between Union and individual truck operators, how payment of hire charges of trucks is accounted for etc

Ratan Sharma

Ratan Sharma (Expert)

24 September 2009 In your case payment is not made to the truck operator but it is made on behalf of the Union to the truck operator. Your contract is with the Union and not with the truck operator. Therefore in my opinion if the freight amount exceeds Rs. 20,000 then you will have to deduct the TDS.

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