TDS Deducted for Transporter

Hey Sona1! Your question about TDS on payments to interstate transporters under Section 194C is a good one, especially with the new TDS provisions coming in from July 2021. Let's break it down clearly:

Situation Recap:

• You're a registered GST dealer.

• You bought goods via an interstate transporter who raised an invoice of ₹34,500 without GST.

• You want to know:

  1. Whether you should pay IGST under Reverse Charge.

  2. If you can avoid deducting TDS if transporter gives a declaration under Sec 194C(6) with PAN.

  3. How does the new Section 206AB (from 01/07/2021) affect this?

1. Is IGST payable on Transporter Invoice under Reverse Charge?

• Under GST law, transportation of goods by road is generally exempt from GST if the transporter is registered and the invoice value is below ₹750 for the particular consignment.

• However, for interstate transport services, GST is usually applicable.

• But here the transporter has not charged GST, likely because they are a registered dealer but the invoice is for transportation service which may be zero-rated or exempt under specific conditions.

• You should confirm whether GST is chargeable or exempt on the transportation service under GST law. If exempt, no reverse charge.

• If GST is applicable and transporter failed to charge, then under GST law, you are liable to pay IGST under reverse charge.

So, check GST applicability first for transportation service.

2. About TDS deduction under Section 194C

• Section 194C mandates TDS deduction on payments to contractors or transporters.

• As per Sec 194C(6), if the transporter furnishes a declaration (Form 27C) that TDS should not be deducted and provides PAN, then you are not required to deduct TDS.

• This applies even if the new TDS rule 206AB is in force.

3. Effect of Section 206AB (from 01/07/2021)

• Section 206AB imposes higher TDS rates for deductees who have not filed IT returns for two preceding years and TDS deducted in aggregate exceeds ₹50,000.

• But if the transporter submits a valid declaration under Sec 194C(6) with PAN, you do not deduct TDS at all, so 206AB does not apply.

• However, if no such declaration is furnished, you must deduct TDS at normal or higher rates as applicable under 206AB.

Summary for your case:

Also verify GST applicability for transportation service; if GST is payable, then reverse charge applies.