TDS in case of GTA

This query is : Resolved

sankar ponnan (Querist)
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28 February 2022 Sir / Mam

We are GTA ( P Ltd)
We do not have any own vehicles
We are renting of all our sub-contract vehicles to another GTA.
Here, We are the sub-contractor to that GTA.
They are ready to deduct the tds on our payment.
Is it applicable?
Plz let us know the right solution
Thanks in adv

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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11 July 2024 As a Goods Transport Agency (GTA) providing services to another GTA, the tax deduction at source (TDS) provisions under Section 194C of the Income Tax Act, 1961 apply. Here’s how it typically works in your scenario:

### TDS Applicability:

1. **Nature of Service:** Since you are providing transportation services to another GTA, the service is classified under Section 194C (contract payments) of the Income Tax Act.

2. **TDS Deduction Responsibility:** According to Section 194C:
- If the payment is being made by a GTA (the principal contractor in this case), they are required to deduct TDS at the rate of 1% on the invoice amount (for transport contracts) under sub-section (6).
- The responsibility to deduct TDS lies with the GTA (the principal contractor) who is making the payment for the transport service.

3. **Your Role as a Sub-Contractor (GTA):**
- As the sub-contractor GTA (P Ltd), you will issue invoices for the transportation services provided.
- The principal GTA (to whom you are providing services) will deduct TDS at the rate specified under Section 194C(6) before making payment to you.

### Steps to Follow:

1. **Issue Correct Invoices:** Ensure that your invoices clearly mention the nature of service (transportation services) and comply with GST invoicing requirements.

2. **TDS Deduction:** The GTA to whom you are providing services (the principal contractor) should deduct TDS at the time of making payment to you. They are responsible for depositing this TDS with the government.

3. **Reconciliation and Compliance:** As a GTA (P Ltd), you should regularly reconcile the TDS deducted by your principal contractor (GTA) with your own records. Ensure that TDS certificates (Form 16A) are received from the GTA deducting TDS.

4. **Filing TDS Returns:** File your TDS returns (Form 26QC for TDS on rent payments) and ensure compliance with TDS provisions.

### Conclusion:

In summary, as a Goods Transport Agency (GTA) providing services to another GTA, TDS under Section 194C(6) should be deducted by the principal GTA before making payment to you. Ensure proper documentation, invoicing, and compliance with TDS provisions to avoid any penalties or issues during audits. If you have any specific concerns or variations in your business model, consulting with a tax professional or chartered accountant would provide tailored advice to your situation.

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