Tds liablity

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2013 Whether the TDS is deductible on sea freight paid for inland transportation of containers ? I think yes TDS is deductible.Please gide me.

Ganeshbabu K

Ganeshbabu K (Expert)
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11 June 2013 No ,
tds is not applicable on sea frieght paid for inland transportaion.

Please refer
Income Tax Officer vs Freight Systems (India) (P) Ltd. on 21 October, 2005

If you are paying to C&f agent ..as re-imbursement of expences and he is providing seperate bill for re-imbursement of expences TDS is not applicable

However TDS is required to be deducted under section 194C if C&F agent not provided sea frieght as re-imbursemnt under sepearte bill.

Thanks & regards
Ganesh babu k

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2013 sir we r paying road freight and sea freight to transporter who charges ST on sea freight and no where mentions this are reimb. of expenses nw that about tds on sea freight

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2013 sir we r paying road freight and sea freight to transporter who charges ST on sea freight and no where mentions this are reimb. of expenses nw that about tds on sea freight

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 July 2025 Here's a detailed clarification on **TDS liability on sea freight paid for inland transportation of containers**:

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### Key Points:

1. **Sea Freight and Inland Transportation Freight**:

* Sea freight usually relates to shipment charges from port to port (international transport).
* Inland transportation charges are for movement within the country (road/rail).

2. **TDS Applicability on Sea Freight:**

* **No TDS on Sea Freight** paid as a separate component, because it is considered a reimbursement or a cost component, not a payment for services under section 194C.
* If sea freight is charged separately and clearly billed as a reimbursement, no TDS is deductible on this amount.

3. **TDS Applicability on Inland Freight:**

* TDS under **Section 194C** applies on payments to transporters for inland freight or transport services.
* If the payment is to a transporter for movement of goods by road/rail, TDS must be deducted on the amount charged for this service.

4. **If the transporter issues a combined bill including sea freight and inland freight, without separating the amounts:**

* TDS should be deducted on the entire amount if the service provider is not reimbursing separately.
* But if the sea freight portion is separately identified and treated as a reimbursement, no TDS on that part.

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### Legal Reference:

* **Income Tax Officer vs Freight Systems (India) (P) Ltd. (2005)** — Held that **no TDS is deductible on reimbursement of expenses**, provided it is billed separately.

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### Your Situation:

* Since your transporter is charging sea freight and road freight with Service Tax included but not mentioning sea freight as reimbursement:

* You should request the transporter to provide separate bills for sea freight (as reimbursement) and road freight (as service).
* TDS should be deducted **only on road freight** under Section 194C.
* If not separated, there is a risk of TDS liability on the full amount.

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### Summary Table:

| Payment Type | TDS Deductible? | Section | Remarks |
| ----------------------------- | -------------------- | -------------- | ------------------------------------------- |
| Sea Freight (Reimbursement) | No | Not applicable | If billed separately as reimbursement |
| Inland Road Freight | Yes | Section 194C | TDS must be deducted on service amount |
| Combined Bill (No separation) | Yes (on full amount) | Section 194C | If no separate billing, TDS on full invoice |

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**If you want, I can help draft a letter/email template to your transporter requesting separate bills for sea freight and inland freight. Would you like that?**

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