TDS on CFA services

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This discussion addresses the correct procedure for deducting Tax Deducted at Source (TDS) when using a Clearing and Forwarding Agent (CFA). The core issue is whether to deduct TDS on the CFA's service charges or on the payments made by the CFA to various agencies like transportation and storage providers. The consensus is that TDS should be deducted on the bills raised directly by the agencies themselves, rather than on the reimbursement amounts paid to the CFA, provided the payment threshold is met.

CA Pawan Koradia

CA Pawan Koradia (Querist)

23 September 2022 Sir, we have availed service of the clearing forwarding agent (CFA). CFA has made payments to various transportation agencies, line agencies and storage agencies and gave us reimbursement notes along with his separate bill of service. My question is whether we should deduct the TDS of the agencies whose expenses are paid by CFA and he gave us reimbursement notes.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 September 2022 TDS to be deducted in case of threshold exceed.

CA Pawan Koradia

CA Pawan Koradia (Querist)

23 September 2022 Sir my confusion is whose TDS is to be deducted? CFA who raised reimbursement notes or agencies who raised bills against our name. (CFA made direct payment to agencies, and we reimburse that amount to CFA.)
P.S We had deducted TDS of the CFA u/s 194C for his services charges as a CFA

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 September 2022 Deduct TDS on agencies who raised bills against your name.

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CA Pawan Koradia

CA Pawan Koradia (Querist)

23 September 2022 Thank you very much sir

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 September 2022 You are welcome.....

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