Tds

This query is : Resolved

DilipKumar V Kotak (Querist)
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25 August 2015 Dear Sir,
My client is Purchasing Goods from local Supplier for supplying goods the Vendor is issuing two separate bills as under:
1) For Goods Supplied.
2) Other for Transporting Goods as 'TRANSPORT CHARGES' (Client is debiting transport charges to Carriage Inward).
Should my client deduct TDS, if so at what rate ?
kindly give your opinion.

Regards,
CA Dilip Kotak

DilipKumar V Kotak

DilipKumar V Kotak (Querist)
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09 September 2015 Respected Sir,

Till now I have not received any reply from your side to my query Dt.25-08-2015.

Kindly reply at an early dated & oblige.

Rregards,
CA Dilip Kotak

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Hi CA Dilip Kotak,

Regarding your query on TDS deduction on transport charges billed separately by the vendor:

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### TDS on Purchase of Goods and Transport Charges

1. **Purchase of Goods:**

* Payment for goods alone **is not subject to TDS** under any section (no TDS on mere purchase of goods).

2. **Transport Charges:**

* Transport charges paid separately for carriage of goods are treated as payment for *transport services*.
* Hence, **TDS is deductible under Section 194C** (Payment to contractors for work/services) on the transport charges portion.
* The applicable TDS rate under **Section 194C is 1% if payment is to an individual or HUF; 2% if payment is to others** (like companies or firms).

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### Summary

| Nature of Payment | TDS Deductible? | TDS Section | Rate |
| ----------------- | --------------- | ----------- | -------- |
| Purchase of Goods | No | N/A | N/A |
| Transport Charges | Yes | 194C | 1% or 2% |

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### Important Notes:

* Ensure vendor provides PAN; otherwise, TDS rate will be higher (20%).
* Maintain clear bills showing separate transport charges.
* Deduct TDS on transport charges only when payment exceeds the threshold (₹30,000 per contract or ₹1,00,000 per year, whichever applicable).

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