TDS

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2011 Is TDS need to be deducted in case payment is made to foreign shipping line company for freight paid in case of import of goods to India?
Sec 172 is not applicable here(that is in case of goods sent from India).
Is sec 195 applies here? we can't say here the income is chargaeble to tax in India?

Need a reply alongwith relevant provisions immediately.........

Thanks

Regards
ROHIT GUPTA

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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28 January 2011 Sec 195 deals with Tax deduction at source for any payments made to any Non-Resident .
However payment made to either Non-Resident Shipping companies directly or to their Resident agents or representatives does not come under the purview of either Sec 194C or Sec 195 by virtue of Sec 172 (1) which inter-alia states that "The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India" . Hence the levy and recovery of Tax from Non-Resident Shipping will only be governed u/s 172 and not 194C or 194I. Kindly also see Circular No. 723 dtd 19-09-1995 of CBDT , which further clarifies the same.
Since No TDS provision is applicable on Non-Resident Shipping Companies

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2011 Thanks Shailesh,,
but sec 172 is applicable in case of Goods exported out of India using Foreign shipping line ..

here I am asking about in case we got the imports done using foreign shipping line....

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 July 2025 Got it — here’s a clear explanation on TDS for payments to foreign shipping lines for **import** freight charges:

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### Background:

* **Section 172** of the Income Tax Act specifically deals with tax deduction for ships **carrying goods or passengers exported from India**.
* It exempts such payments from TDS provisions under other sections like 194C or 195.
* This applies **only when goods are shipped out of India** (exports).

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### Your Query:

* What about **freight paid to foreign shipping lines for import of goods into India**?
* Does Sec 195 apply here for TDS deduction?

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### Explanation:

* Since Section 172 applies **only to goods shipped from India** (exports), it **does not cover imports**.
* So, payments made to foreign shipping companies for bringing goods **into India** are **not covered under Sec 172**.
* Therefore, Sec 195 applies on payments to non-resident foreign shipping companies for freight on imports.
* Under Sec 195, any payment made to a non-resident is chargeable to tax if it is "income deemed to accrue or arise in India."
* Freight paid for imports is **considered income accrued or arising in India**, so **TDS under Sec 195 is applicable** on such payments.

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### Important points:

* Rate of TDS may be subject to DTAA provisions with the country of the foreign shipping company.
* Resident agents or representatives of the foreign shipping company might also be liable for TDS under Sec 195.

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### Reference:

* CBDT Circular No. 723 dated 19-09-1995 clarifies that Sec 172 applies only to exports, not imports.
* Income Tax Act Sections 195 & 172.

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### Summary:

| Situation | TDS Applicability |
| -------------------------------------------------- | -------------------------------------- |
| Payment to foreign shipping for **export** freight | No TDS under Sec 195 (Sec 172 applies) |
| Payment to foreign shipping for **import** freight | TDS applicable under Sec 195 |

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If you want, I can help you draft a formal reply with these references. Would you like that?

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