Cash payment to truck driver

Others 3225 views 11 replies

mayank

Self Employed- Coal Trader

38 Points Joined January 2013

A coal trader hires a truck driver for transportation of coal from Jharkhand to Uttar Pradesh. The total freight amounts to Rs. 34500/-.

Will the payment be disallowed under Income Tax rules?
Is TDS applicable on this payment?
The rule states payment for plying, hiring or leasing goods carriage..... isthe above mentioned transaction covered under the defination of "plying, hiring or leasing goods carriage"? Can he make the payment in cash on a single day?

Thanks

Replies (11)

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Joined March 2009

Dear Mayank

If there is any contractual agreement between parties then Sec 194C will be applicable @ 1% or 2% depending apoun the status of the person.

Secondly as the single payment is above 30,000/- the TDS will be required to be deducted on the same.

Third if cash payment is made to him then expenses will NOT get disallowed as the payment is above 35000 is covered under income tax act. Please refer to section 40A and rule 6DD for more clarity.

Regards

Arpit Shah

Accountant

21438 Points Joined August 2012

Thanks for sharing

Nishant Singla

Chartered Accountant in Practice

71 Points Joined April 2012

Dear Mayank As per sec 40A(3), limit for the transporters is Rs 35000 instead if Rs 20000. So you can made payment of rs. 34500 in cash in a single day. Further if the transporter provide his pan then there is no requirement of deduction of tds as pee sec 194c, if he not provide pan then deduct @ 20 % since single payment exceeds Rs. 30000

Kadiwal and Associate

Proprietor

48 Points Joined April 2012

Thanks for sharing.

mayank

Self Employed- Coal Trader

38 Points Joined January 2013

Thanks for the reply. as mentioned that since the single payment exceeds 30000 tds will be attracted if the driver does not quote his pan. I want to ask whether tds will be attracted if the payment is made in two parts: 25000+9500. Also what will be the tds liability if there are more than one instance of such payment in a single month? Thanks

Rupesh Soni

Taxation Consultant & CA final student

504 Points Joined September 2009

agreee wid nishant....PAN NUMBER INNEED...

J. K. Ratan

Compliance Advisor

794 Points Joined August 2013

agree with Nishant...

sharad rai

learner

178 Points Joined August 2010

Tds applicability on bill amount. Transporter gives you single bill. So it's not possible for you to escape Tds by doing that as you mention..

Guest

if you have pan of driver then you won't be defaulter for tds provisions. protect yourself from disallowance you have to take care that the payment more than 35000 is not made in cash in a single day. No need to worry abt tds.