Tds for c & f business
This query is : Resolved
25 June 2015
Dear Experts,
One of my client is doing C & F business and he is raising bill to his principal company as follows:
BILL TYPE - 1
Freight (Transport) = 1,00,000.00
(+) 30%
Slap ST @ 14% = 4,200.00
TOTAL = 1,04,200.00
BILL TYPE - 2
Labour Charges = 1,00,000.00
Loading, U/L, Trnsp)
Service Charges = 30,000.00
ST @ 14% = 18,200.00
TOTAL = 1,48,200.00
So, my question is where there TDS is applicable? Or not?. If yes, what is the rate of TDS for those bills and how to calculate it? Because, my opinion is the above said bills were re-imbursement by the principal company. So, they did not receive any income apart from Service Charges. So, logically the TDS is affected in Service Charges head only @ 10% (either 194H or 194J). In another way, we have to show the same in 194C @ 1% for both bills (exclude ST @ 14%).
Please give clear picture for the above queries.
Thanks in Advance.
One of my client is doing C & F business and he is raising bill to his principal company as follows:
BILL TYPE - 1
Freight (Transport) = 1,00,000.00
(+) 30%
Slap ST @ 14% = 4,200.00
TOTAL = 1,04,200.00
BILL TYPE - 2
Labour Charges = 1,00,000.00
Loading, U/L, Trnsp)
Service Charges = 30,000.00
ST @ 14% = 18,200.00
TOTAL = 1,48,200.00
So, my question is where there TDS is applicable? Or not?. If yes, what is the rate of TDS for those bills and how to calculate it? Because, my opinion is the above said bills were re-imbursement by the principal company. So, they did not receive any income apart from Service Charges. So, logically the TDS is affected in Service Charges head only @ 10% (either 194H or 194J). In another way, we have to show the same in 194C @ 1% for both bills (exclude ST @ 14%).
Please give clear picture for the above queries.
Thanks in Advance.
25 June 2015
for brokerage, commission u/s 194H,
and no tds on reimbursement of exp. if separately raised by you.
and no tds on reimbursement of exp. if separately raised by you.
27 June 2015
Dear Expert,
Thanks for your immediate reply, could you please give me any circulars or articles or GO pertain to the no TDS on re-imbursement of expenses. if separately raised.
Thanks for your immediate reply, could you please give me any circulars or articles or GO pertain to the no TDS on re-imbursement of expenses. if separately raised.
27 July 2025
Sure! Here’s the clarity on **TDS applicability on reimbursements in C\&F business**:
---
### 1. **TDS on Reimbursement of Expenses**
When you raise bills that are pure **reimbursements** (like freight, transportation, loading/unloading charges, or service tax charged separately), **no TDS is deductible** on the reimbursement amount if:
* These expenses are actually incurred by you on behalf of the principal company,
* And the bills clearly indicate that these are reimbursements (with supporting documents),
* The reimbursement amount does **not include any markup or profit**.
**TDS is not applicable on pure reimbursement.**
---
### 2. **TDS on Service Charges / Commission**
* The **service charges or commission** component billed by you to the principal company is **taxable income**.
* TDS will apply on the **service charges/commission** amount (excluding service tax).
* The applicable TDS section depends on the nature of the service:
| Section | Description | TDS Rate |
| -------- | ---------------------------------- | ----------- |
| **194H** | Commission or Brokerage | 5% or 10%\* |
| **194J** | Professional or Technical Services | 10% |
\* Usually 5% on commission, but verify specific agreement.
---
### 3. **TDS on Freight**
* If freight is paid by the principal company **to a transporter or third party**, no TDS is deducted on your reimbursement bill for freight.
* If you provide transportation services, TDS under **Section 194C** (Contractor payments) @1% may apply on freight charges (excluding service tax).
---
### 4. **Relevant Circulars and Notifications**
* CBDT Circular No. 715 dated 18.09.1994 clarifies that **no TDS is applicable on reimbursement of expenses if separately indicated** in the bill.
* Also, judicial pronouncements confirm that reimbursement without markup is not taxable.
---
### **Summary for your case:**
| Particulars | Amount | TDS Applicable? | Rate & Section |
| ------------------------------ | --------- | -------------------- | ------------------------------- |
| Freight | ₹1,00,000 | No, if reimbursement | N/A |
| Service Tax on Freight | ₹4,200 | No | N/A |
| Labour Charges | ₹1,00,000 | No, if reimbursement | N/A |
| Service Charges | ₹30,000 | Yes | 10% under 194J or 5% under 194H |
| Service Tax on Service Charges | ₹18,200 | No | N/A |
---
If you want, I can help you draft a note or reference the specific circular. Would you like that?
---
### 1. **TDS on Reimbursement of Expenses**
When you raise bills that are pure **reimbursements** (like freight, transportation, loading/unloading charges, or service tax charged separately), **no TDS is deductible** on the reimbursement amount if:
* These expenses are actually incurred by you on behalf of the principal company,
* And the bills clearly indicate that these are reimbursements (with supporting documents),
* The reimbursement amount does **not include any markup or profit**.
**TDS is not applicable on pure reimbursement.**
---
### 2. **TDS on Service Charges / Commission**
* The **service charges or commission** component billed by you to the principal company is **taxable income**.
* TDS will apply on the **service charges/commission** amount (excluding service tax).
* The applicable TDS section depends on the nature of the service:
| Section | Description | TDS Rate |
| -------- | ---------------------------------- | ----------- |
| **194H** | Commission or Brokerage | 5% or 10%\* |
| **194J** | Professional or Technical Services | 10% |
\* Usually 5% on commission, but verify specific agreement.
---
### 3. **TDS on Freight**
* If freight is paid by the principal company **to a transporter or third party**, no TDS is deducted on your reimbursement bill for freight.
* If you provide transportation services, TDS under **Section 194C** (Contractor payments) @1% may apply on freight charges (excluding service tax).
---
### 4. **Relevant Circulars and Notifications**
* CBDT Circular No. 715 dated 18.09.1994 clarifies that **no TDS is applicable on reimbursement of expenses if separately indicated** in the bill.
* Also, judicial pronouncements confirm that reimbursement without markup is not taxable.
---
### **Summary for your case:**
| Particulars | Amount | TDS Applicable? | Rate & Section |
| ------------------------------ | --------- | -------------------- | ------------------------------- |
| Freight | ₹1,00,000 | No, if reimbursement | N/A |
| Service Tax on Freight | ₹4,200 | No | N/A |
| Labour Charges | ₹1,00,000 | No, if reimbursement | N/A |
| Service Charges | ₹30,000 | Yes | 10% under 194J or 5% under 194H |
| Service Tax on Service Charges | ₹18,200 | No | N/A |
---
If you want, I can help you draft a note or reference the specific circular. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability of TDS on CFS, CHA fees, and shipping line charges
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Unable to generate and save json file for updated return
- Applicablity on tds
- GST payable under RCM
- Regarding TDS not deducted on rent
- GSTR9- ITC
- PRODUCT AND SERVICE CATEGORY CODE
- Tax audit & Switching from Presumptive taxation
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- Received advance money for supply of goods but forfeited by us since full money not received
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
