TDS applicability on HSN/SAC Invoices

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Rohit Joshi

Tax Executive

43 Points Posted on 01 July 2020

Hi team,

if we have purchased material from the vendor & they have mentioned HSN code on the invoice, so there will be no TDS to be deducted on the same as its goods, but if they have also mentioned freight charges or shipping charges on the same invoice & they have also mentioned SAC for the same now so my question is whether TDS is to be deducted on this invoice or not?

Regards
Rohit
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Replies (4)

Quick Summary

If invoice is for purchase of goods (HSN) with freight/shipping added by vendor, TDS is generally not applicable as it remains a goods contract. SAC shown is only for GST purposes. TDS under 194C applies only when there is a separate service contract for freight.

CA Saloni

Manager-Accounts & GST Consultant

3197 Points Posted on 01 July 2020

For tds to be deducted u/s 194 C you must have a contract with the party related to freight or shipping bill....

Rohit Joshi

Tax Executive

43 Points Posted on 01 July 2020

Vendor is not a service vendor, we are purchasing material from them but they are adding fright charges on that. I asked 1 off CA regarding this & they said that the total cost would be considered as material cost as TDS would not apply on the same.
Please advice

Connectiwity

Reach for expert advice

30 Points Posted on 01 July 2020

Hi Rohit, appears that you are purchasing on FOR basis i.e. goods along with delivery charges. In this case, there would be no need to deduct TDS as it is purely goods procurement. SAC is mentioned on invoice only for GST law purposes.

Hope it helps,
ConnectiWity

Aashok Kumar Sharma

Finance/Compliance Consultant

77925 Points Posted on 06 November 2026

Correct conclusion: on FOR (delivered) purchases, freight shown on the same invoice is part of the price of goods. No 194C TDS applies, because there is no separate contract for carriage with that vendor.

• GST supports this: freight charged by the supplier is included in the value of the goods (Sec 15(2)(c)) and is a composite supply. The SAC on that line is often incorrect; it should follow the goods' HSN.

• But check Sec 194Q: if your turnover exceeded Rs 10 crore last year, deduct 0.1% on purchases from that vendor above Rs 50 lakh in the year. This is computed on the total purchase value including freight, excluding GST if shown separately.

• 194C applies only where you separately engage and pay a transporter. Even then, no TDS if the transporter declares owning 10 or fewer goods carriages and furnishes PAN (Sec 194C(6)).