Tds for c & f business

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S. Karthi (Querist)
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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.

Rupesh Jain

Rupesh Jain (Expert)
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25 June 2015 for brokerage, commission u/s 194H,
and no tds on reimbursement of exp. if separately raised by you.

S. Karthi

S. Karthi (Querist)
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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.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 July 2025 Sure! Here’s the clarity on **TDS applicability on reimbursements in C\&F business**:

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### 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.**

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### 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.

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### 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).

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### 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.

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### **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 |

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If you want, I can help you draft a note or reference the specific circular. Would you like that?

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