TDS on freight

This query is : Resolved

CA. Mahesh Agarwal (Querist)
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17 February 2009 Whether TDS is applicable on payment of freight to truck owners in cash. Individual track of truck owners is not possible. So how can we check the limit. Truck owners submit GRN in the name of some transporters. Should we check the limit of Rs. 50000 transporter wise whose GRNs are we have received.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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17 February 2009 you can create Transporter ledger & freight book by journal & pay cash in account name.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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17 February 2009 Yes.
The limit is per person.

CA. Mahesh Agarwal

CA. Mahesh Agarwal (Querist)
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19 February 2009 I think u have not understand the query correctly. Actually truck owners are submitting the GRN of other transporters. then we have to check the limit of that transporter or of that individual truck owner.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Your query is quite relevant and common in logistics-heavy industries. Here's a clear breakdown of how **TDS on freight payments under Section 194C** should be handled, especially when truck owners submit **GRNs (Goods Receipt Notes)** in the name of other transporters.

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### 📌 **Applicable TDS Section: 194C (Payment to Transporters)**

**Section 194C(6)** provides an exemption from TDS **if payment is made to a transporter owning 10 or fewer goods carriages** and the **PAN is furnished**. Otherwise, TDS **must be deducted**.

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### ✅ **Now to your core question:**

> If **individual truck owners** submit **GRNs** in the name of a **registered transporter**, whose limit do we track for TDS applicability?

### 🔍 **Answer:**

You should check the **TDS limit in the name of the transporter** as shown on the **GRN** or **bill/invoice** — **not the actual truck owner**.

* **Why?** Because **you are making payment to the transporter**, not directly to the truck owner.
* The person in whose name the **invoice is raised** and **payment is made** is the **contractor** for TDS purposes.
* So, **Rs. 30,000 per transaction** or **Rs. 1,00,000 aggregate per year** **threshold** will be checked **transporter-wise** (not per truck or driver).

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### 🔄 **Example:**

* You receive GRNs from multiple truck drivers, but the GRN and invoice is in the name of "XYZ Transport Co."
* Even if each truck owner is different, **XYZ Transport Co.** is considered the contractor.
* So, TDS is based on the **cumulative freight** paid to XYZ Transport Co.

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### ⚠️ **Cash Payments Don't Exempt You From TDS:**

* Even if you're paying **in cash**, TDS is still applicable if thresholds are crossed.
* Also, be careful of **Section 40A(3)** disallowance of cash payments exceeding ₹10,000 per day to a person.

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### ✅ **Checklist for Compliance:**

| Criteria | Action Required |
| --------------------------------- | ----------------------------------------------- |
| Payment to registered transporter | Check threshold under **Section 194C** |
| PAN furnished & owns ≤10 trucks | **No TDS** (need a declaration as per Rule 31A) |
| PAN not furnished or >10 trucks | Deduct TDS @ 1%/2% as applicable |
| GRN in third-party name | Track threshold **against that third party** |

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Let me know if you'd like a **sample declaration format under Rule 31A** (for transporters claiming no TDS under 194C(6)).

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