TDS on C & F

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2009 Hi,
our debtor paid c & F charges after deducting TDS amount and he raise a debit note against us regarding c & F charges paid by him. my question is wheather we need to deduct the TDS on the amount of which debit note is raised by our debtor? give reason.

SSSingh.K
Accounts Officer

GSTP Hari Dhayalan Konar

GSTP Hari Dhayalan Konar (Expert)

02 December 2009 yes you may deduct tds. but if it a reimbursement of your expenses, then no need to deduct. ball is in your court.

Sunil

Sunil (Expert)

02 December 2009 Any sum paid to C&F Agent is subject to TDS including ocean freight and duty / taxes etc. Ref Circular 715 of 1995. The logic is that if a C&F agents invests his money for your freight and duty payments, the motivation to make these payments on your behalf is the income he will earn on his commission. Even if you pay him in advance you have to deduct TDS as the logic is that he has not yet paid the amounts that are intended as reimbursements. The only exemption on such payments is service tax but not TDS.

Now if he has paid another C&F agent, that is a sub contractor. You have to deduct TDS from your agents bill. He has to deduct when he pays to the other agent. Both agents have to face deduction. Your agent as you say has deducted TDS because there is a contract between him and the other agent. If there is a contract between him and the other agent then it cannot be your expense that you are reimbursing. It is his expense and he is billing you with profit. His AO will definitely allow him the expense as he has deducted TDS. As far as you are concerned you will not be allowed the expense on which you have not deducted TDS.