TDS on Rail freight payments made to private Rail operators

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 July 2011 Dear Sir,

Pls advice tds is applicable on payments made to private rail operators for rail freight. for example if we are moving containers through private operators like CRRS , Gateway rail frt from Mumbai to Delhi then TDS is applicable on that payment or not. Bcz when containers were moved through Concor it was not applicable. Pls advise same rule is applicable for private train operators or not.

CS Bijoy

CS Bijoy (Expert)
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16 July 2011 Can you please specify what you mean by private rail operator.

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2011 Dear Sir,

Earlier Container Corporation of India was only the service provider . Now so many train operatiors are in the marker Like Gateway rail frt Ltd. Container rail road services Pvt Ltd. As per Sec 194 c if any payment made for rail frt to concor was exempted form TDS. There is confusion in train operotors Whether same rule is applicable for them or not . Wolud like to know that same rule is also applicable to private operators or not . Any rail frt payment made to private train operatoes is exempted from tds or not

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 July 2025 Good question! Here’s the clarity on **TDS applicability on rail freight payments**, especially concerning **private rail operators**:

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## 1️⃣ Background:

* Earlier, **Container Corporation of India Ltd. (CONCOR)** was the sole container freight service provider.
* Payments made to CONCOR for rail freight services were **exempt from TDS under Section 194C**.
* Now, many **private rail freight operators** (like Gateway Rail Freight, Container Rail Road Services Pvt Ltd, etc.) have entered the market.

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## 2️⃣ Is TDS applicable on payments to private rail freight operators?

### ✔️ **Yes, TDS is applicable on payments made to private rail freight operators** under **Section 194C (Payments to Contractors)**.

* Section 194C requires TDS deduction on payments for transportation services.
* **Only payments made to government or notified entities are exempt** from TDS.
* CONCOR, being a government-owned company, was exempt.

### ❌ Private operators **are not government entities** or notified under TDS exemption list, so TDS deduction is **mandatory**.

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## 3️⃣ Relevant Legal/Practical Points:

* **Section 194C** mandates TDS on payments to contractors and transporters.
* **Rule 37BA of Income Tax Rules** exempts TDS on payments made to Government or specified undertakings.
* CONCOR falls under this exemption, private rail freight operators do NOT.

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## 4️⃣ Rate and procedure:

* TDS to be deducted at **1% on transportation payments** to resident transporters under Section 194C.
* PAN of the payee should be obtained to apply lower TDS rates.
* Deposit TDS and file returns as per standard rules.

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## **Summary Table**

| Payee Type | TDS on Rail Freight Payment | Reason |
| ---------------------- | --------------------------- | --------------------------------- |
| CONCOR (Govt Entity) | No | Exempt under Rule 37BA |
| Private Rail Operators | Yes | Not exempt under Income Tax Rules |

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If you need help with TDS deduction entries or Form 26Q for such payments, I can assist!

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