When Freight is paid, if the assesee has the PAN of the party, Tax need not be deducted at source. But if in the party's bill, they mention the service as Truck/Trailor Hire Charges, can the same proceedure be followed or should Tax be deducted at source U/s 194C?
Is there any distinction between Freight paid and Truck/Trailor Hire Charges paid?
Hi Mr. Karthik ,
According to the Harper Collins English Dictionary:
1.) "Trailer" means a container on wheels which is pulled by a car or other vehicle and which is used for transporting large or heavy items"
2.) A Trailer is the long rear section of a lorry or truck in which goods are carried.
3.) "Hire" means to pay money to the owner so that you can use it for a period of time.
4.)Freight is the movement of goods by lorries, trains, ships or aeroplanes
According to section 194C(6) of the Income tax act, 1961 " In a case where the payee-contractor is in the business of plying. hiring or leasing goods carriages, any freight charges payable payable to such contractor shall not be subject to tax deduction at sorce in case he furnishes permanent account number to the peron responsible for tax deduction at source"
In this case since the Truck hire charges are obviously paid for transporting the goods, hence they shall come within the meaning of Freight. Hence they are not liable for TDS if the transporter furnishes his PAN.
Regards
Viggi
Thanks. One more question. Check out this case https://itatonline.org/archives/index.php/ito-vs-indian-oil-corporation-itat-delhi-s-194c-vs-194-i-tests-to-distinguish-transportation-contract-from-hire-contract/
It is basically about the distinction between 194C & 194I.
What is the difference between tanker hire in the above case and freight?
Assumptions:
A) There is written contract of hire between the two parties
B) There isn't any written contract between the two parties
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