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Please solve this query

Anjali Agrawal (Student) (67 Points)

05 October 2015  

Hello everybody

I am really confused, please please please help me out. We are Transporter We deal in transportation goods (i.e. we will supply Dumpers to Companies and Big Transporter to transfer goods from one place to another)(Here Goods are: Coals, Fly Ash, Lime Stones e.t.c.). Now, as such we do not own any trucks but what we do is, we take a number of trucks on rent (from small – small truck owners, each owing not more than 3 to 4 trucks) and then use all the trucks taken together to transfer the goods of the companies. we  provide 10-20 trucks daily basis.

Payament Information: We Receive Payament From Companies in case we supply to co. and from Big Transporters if we supply to them and then give it to the Dumpers owner after deducting our commission...(Our Turnover is less than 1 crore a year and i am an individual)

My questions

1) Does the provisions of service tax applies to us???

2) which itr should i file and in nature of bussines which code to choose?? is it bussiness or income from other sources??

3) can we opt 44AD presumptive income and show profit 8% of receipt??

4) Are we getting covered under section 44 AE ? If not, why not ?

5) Benefit (non deduction of TDS) under sec 194 C – is it available only to those people who are paying tax as per sec 44 AE ? If not, then are we eligible for taking this advantage as well ?


 14 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 05 October 2015

Hi, 1) you are laible for service tax as you are not covered under any negative list. 2) It is busniess income, but are you company? Firm? Or individual? 3) if you are company or your income consist of commission or brokerage you cannot claim benifit of sec 44AD 4) you are not covered u / s 44 AE, as owning of trucks is required to attract that provision. 5) if you are paying to people who lease you trucks and they furnish pan then you need not deduct tds and pay to the said transporters ( applicable if only they own 10 trucks or less) , where as for your receipts tds will be deducted. Regards Karthik V Kulkarni

Anjali Agrawal (Student) (67 Points)
Replied 05 October 2015

i am an individual.....company pays the freight in my name and file tds return without deduction of tds also which reflect in my form 26as also so do i again require to obtain certificate from trck owners that they dont have ten trucks and file TDS return without deduction of TDS???do i have to file TDS return?? and who will pay the service tax and in which amount??

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 06 October 2015

You are liable to pay service tax if your gross reciepts exceed 10 lac in preceeding year. You should collect the same from company and pay . Yes, you have to file tds returns uploading and giving pan details of the truck owners. Or else if they dont have pan you should deduct at 20%.

Anjali Agrawal (Student) (67 Points)
Replied 06 October 2015

1000 ki kamai nai h 1 lac me 20000 ka tds kaha se katu

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 06 October 2015

TDS is to be deducted from payment to truck owners not from your earnings.

Example : you are paying 10000 to truck owners , instead pay 8000 to them and 2000 as tds to govt. Ya if you have already paid to truck owners you have to ask them to furnish pan. Or you can take a declaration that they have included the same income in their return and paid tax accordingly.

Regards

Karthik V Kulkarni

Anjali Agrawal (Student) (67 Points)
Replied 06 October 2015

Then service tax will be paid in which amount suppose I have received 100000 from big transporter they have filed TDS return and its appearing in my 26as and then I pay 98000 to truck owners(2000 my commission) so here should I require to file TDs return for payament of 98000 as the big transporter has already filed the TDs return for 100000 which he gave to me so won't it be double filing of TDs return???? And service tax will be paid in which amount in 98000 or in 2000 and by whom?? Please explain am very confused...

Anjali Agrawal (Student) (67 Points)
Replied 06 October 2015

Now I take cheque in my name from big transporter(100000) and withdraw the money in cash and give it to the owners(98000).....I follow this procedure beside this I don't know anything...please tell me the complete procedure how I should receive and pay money what are the tax implications for me....

Shivani Mittal (Practice) (425 Points)
Replied 06 October 2015

Dear Anjali,

As per the facts stated above, following are the answers to your query :

1. ST Liability - Yes as it is not covered in negative list

2. ITR Form - ITR 4; Business Code - As per my understanding it should be 0712-Transporter

3. Secc 44AE is not applicable as for sec 44AE ownership is must. Sec 44AD is also not applicable as clause ii of sec 44AD (6) specifically excludes a person earning income in the nature of commission or brokerage.

4. Benefit of non - deduction of TDS u/s 194C (6) can be availed by assesse in case of business as mentioned u/s 44AE which is not applicable in your case. Hence, such benefit is not available to you.

Regards

CA Shivani Mittal

Shivani & Associates

cashivani.associates @ gmail.com

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 06 October 2015

Hi,

While paying to you the BIg transporter company will deduct tds and pay and in the same way while you are paying it to small transportor you have to deduct tds on Rs 98000 and pay to the small transporter. 

As far as Service tax is concerned you have to raise an invoice with ST on rs 100000 and the big transporter will pay you the ST and you have to pay to the govt. ST will be applicable if your preceeding years income exceeds Rs 10,00,000. If it doesnt exceed then for the current year you need not collect ST on first 10,00,000 receipts. So service tax is an indirect tax and you have to collect the same from your client. Like wise if the small transporters are liable to ST then they will collect it from you and they will pay.

Example:

Supoosing you are liable to ST ( There is an exemption for Small service providers) and you raise a bill of rs 100000 , bill including st will be 112000 approx and 100000 you can keep and 12000 is to be paid to govt as ST. If your small service provider raises a bill to you of rs 80000 and with ST the bill amount comes to 89600, he will keep 80000 and pay 9600 to govt. In that case while remitting to govt you can remit 12000-9600 = 2400. So this is how the flow of indirect taxes go. 

Regards

Karthik V Kulkarni

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 06 October 2015

And you are liable to deduct tds only if your turnover exceeds the tax audit limit mentioned in sec 44ab in the preceeding financial year.

Regards

Karthik V Kulkarni

Miss Rinkal (Student) (1304 Points)
Replied 06 October 2015

@ Anjali Agarwal:

1. You are liable to service tax if gross receipts exceeds Rs 10 lacs in a financial year as the service provided is not covered under the negative list

My views 

2. You can file itr4 / itr 4s as income is chargeable under the head profits from business. Nature of business will be Contractor for transportation of goods. And code will be 0505

3. 44AD presumptive income can be applicable since the income would be more of a contractual income than commission income as you said the dumpers are taken on rent. 

4. 44AE section cannot be applied as those are rented truck not owned. That section is applicable only if it is owned trucks.

5. Benefit of contractor can definitely be availed as it is a contractual income and engaged in transportation business, I.e TDs provisions would not apply if PAN details of individual is submitted

Regarding your this post

"i am an individual.....company pays the freight in my name and file tds return without deduction of tds also which reflect in my form 26as also so do i again require to obtain certificate from trck owners that they dont have ten trucks and file TDS return without deduction of TDS???do i have to file TDS return?? and who will pay the service tax and in which amount??"

I would like to say that you will be liable to deduct tax u/s 194C. And TDs provisions are to be followed only if in the previous year, you were subjected to tax audit.

Although my views contradict with the views expressed provided by other members. Would still like to share it.

Shashank Upadhyay (Students) (288 Points)
Replied 07 October 2015

Mam, First of all...u need not to deduct Tds on paying rent to truck owners. reason being as u mentioned, you are an Individual and your Turnover is less then Rs. 1cr. Now regarding service tax, everyone was correct above that you have to collect service tax from big companies and thereafter deposit the same and file STR before due date. Also since your principal business is of commission agent, you are not covered under 44AD and u can claim your income below 8% without getting your books audited.

Miss Rinkal (Student) (1304 Points)
Replied 07 October 2015

@ Anjali, 

Although there is a thin line between contractor and commission agent. According to me, normally a contractor receives fixed remuneration / income whereas in case of a commission agent it is normally received as a % of turnover / gross receipts. Here what you have described the work is that of a contractor and not that of a commission agent. Also in case of a commission agent, you are acting on behalf of the principal. Whereas in case of contract, there is no principal-agent relationship.

Hence I feel that since the business is a contractual business and not a commission business, sec 44AD can be considered

I hope I m able to clear my view wrt commission and contractual business

Anjali Agrawal (Student) (67 Points)
Replied 07 October 2015

m very confused which ITR to file, Which nature of bussiness to choose, how much profit to show.....i have checked my form 26AS of F.Y. 2014-15 there is only 643000 of Income U/S 194C is appearing in the form in which no TDS has been Deducted by the big transporter.....now how to file the return


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