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Query regarding sec 194c(6) of income tax act 1961

Tax queries 912 views 7 replies

Please clarify whether new provision of TDS is applicable on all Freight Payment made to party on behalf on transporter or to the transporter. There is no any specific contractbetween assesee and transporter. Hence For ex we purchase machinery from ABC ltd for Rs.1,00,000. Transport charges of TCI XPS or Say SAFE EXPRESS 40,000. Total payment to ABC ltd including Transport charge is made 1,40,000. or To ABC Ltd 1,00,000 nd to TCI XPS or SAFE EXPRESS 40,000. Whether TDS is required to be deducted?

Replies (7)

If payment is made to ABC Ltd of Rs 140000, then TDS @ 2% will be deducted, since the Section uses the word any sum. If payment is made to Transporter and all the conditions are specified, then the exemption for deducting TDS will apply accordingly.

But in first case we are just reimburshing the payment on behalf of transporter also to ABC Ltd. We dont have specific contract with transporter. It is only ABC Ltd which have done contract with Transporter for sending consingment. Hence in this case i dnt think TDS is Required to be deducted from our side. It will be a liability of ABC Ltd.

In Case two that is direct payment to transporter TDS may be applicable,But i am Not sure,because the wording of 194C says that Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labour for carrying out any work) under a contract in pursuance of a contract between contractor and person specified, shall deduct in context at the time of such payment thereof in cash of by issue of a cheque or draft or by any other mode or its credit to contractor’s account or any other account, by whatever name called, whichever happens earlier.

As we donot enter into any contract with transporter it is ABC Ltd which entered into Contract hence it is not our liability as per my view. In second case i am not sure,please advice.

Dear Sarban, 

As per CBDT Board, Circular No 715, dared August 8, 1995, reimbursement cannot be deducetd out of the bill amount for the purpose of tax deduction of source, hence you have to deduct TDS @ 2% on 140000, when you make a payment to ABC Ltd.

If you are paying Rs40000 to the transporter, then please check whether it falls within the ambit of the exemption allowed to transporters w.e.f 01.06.2015, and act accordingly

Dear Sarban,

No TDS is to be deducted on the contract for purchase of goods. Hence, there will be no TDS deduction for the purchase of machinery.

Hope ur query is cleared

No i am still in bit of dought. As we have not entered into any contract with Transporter,it is ABC Ltd which entered into Contract with Transporter,Invoice is raised in our name by Transporter cause machine is to be deliverd to us, Payment to Transporter was made by ABC Ltd. Now we will pay to ABC Ltd total amount including Transport charges. I.e one type of Reimburshment. but my dought is only as section say under a contract in pursuance of a contract between contractor and person specified. So how we are liable for deduction o TDS? 
 

U dnt have to pay TDS on 100000 as it is related to purchase of goods.

and on 40000, if not exempted, then u have to deduct TDS


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