TDS OR GST APPLICABLITY
This query is : Resolved
18 January 2025
Under High Sea Sales we imported the Goods through Party &
Party issued Debit note for Freight Charge Reimbursed.
There is any applicability of TDS or GST ?.
Party issued Debit note for Freight Charge Reimbursed.
There is any applicability of TDS or GST ?.
12 August 2025
✅ GST Applicability:
Is Freight Supply a Service?
Yes, freight is considered a service under GST.
Who Is Supplying the Service?
The party who issues the debit note is providing the freight service.
Is GST Chargeable?
If the party is registered under GST, then GST is applicable on freight charges.
Usually, freight on import is taxable under GST (IGST on import services).
High Sea Sales Impact:
Under High Sea Sale, the ownership of goods transfers after unloading at Indian port.
Freight related to import till Indian port is part of import of goods and GST paid at customs (IGST).
But freight after unloading or domestic freight is subject to GST.
On Debit Note for Freight:
If it’s a reimbursement with mark-up or actual charge, GST applies if service provider is registered.
If it’s just a pure reimbursement with no mark-up and supported by documents, GST might not apply.
✅ TDS Applicability:
TDS under GST (Section 51):
Government agencies deduct TDS at 2% on payments to suppliers of taxable goods/services.
This applies only if your company is a government agency or notified person.
TDS under Income Tax:
If freight provider is a contractor or transporter, TDS under Section 194C (contract payment) or Section 194I (rent) may apply.
Freight is usually contractual service, so Section 194C applies at 1% or 2%.
On Reimbursed Freight:
If it is part of the contract amount, TDS applies.
If it is a pure reimbursement with proof of actual expense, generally no TDS on reimbursement.
Is Freight Supply a Service?
Yes, freight is considered a service under GST.
Who Is Supplying the Service?
The party who issues the debit note is providing the freight service.
Is GST Chargeable?
If the party is registered under GST, then GST is applicable on freight charges.
Usually, freight on import is taxable under GST (IGST on import services).
High Sea Sales Impact:
Under High Sea Sale, the ownership of goods transfers after unloading at Indian port.
Freight related to import till Indian port is part of import of goods and GST paid at customs (IGST).
But freight after unloading or domestic freight is subject to GST.
On Debit Note for Freight:
If it’s a reimbursement with mark-up or actual charge, GST applies if service provider is registered.
If it’s just a pure reimbursement with no mark-up and supported by documents, GST might not apply.
✅ TDS Applicability:
TDS under GST (Section 51):
Government agencies deduct TDS at 2% on payments to suppliers of taxable goods/services.
This applies only if your company is a government agency or notified person.
TDS under Income Tax:
If freight provider is a contractor or transporter, TDS under Section 194C (contract payment) or Section 194I (rent) may apply.
Freight is usually contractual service, so Section 194C applies at 1% or 2%.
On Reimbursed Freight:
If it is part of the contract amount, TDS applies.
If it is a pure reimbursement with proof of actual expense, generally no TDS on reimbursement.
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