TDS Hassle

TDS 393 views 5 replies

sujith

Finance & Operations

26 Points Joined November 2009

Hi Everyone!

I manage a logistics brokerage company. Because of the extreme competition in the market , our gains are only 2 - 3%. Now while making the payments our customers deduct 2% TDS as applicable to contractors ( Section 194C ) which as you would have noticed consumes almost all our margins.

Now I know we can claim refund from the government but it takes a painful 1.5 - 2 years for the refund to happen ( our refund for 2007 - 08 is still pending ). At the same time we have to pay our TDS to the government on a monthly basis. Because of this , we are finding it very difficult to find any incentives in doing the business. Am I missing something here or is the government system for TDS really so inefficient?

Would any of you experienced professionals be able to suggest some alternative here?

Replies (5)

Shailly

Consultant

59 Points Joined July 2009

Hi Sujit ,

Government has already issued remedy for the same. For Transport Contractors From 1st October,2009 no TDS has to be deduted if PAN is furnished to the deductor.If PAN is not furnished then normal TDS rates will be applicabe from 1st October 09 to 31st March 10.From 1st April 2010 if PAN is not furnished then TDS wil be deducted @ 20%

sujith

Finance & Operations

26 Points Joined November 2009

Hi Shailly ,

Thanks for that. Now as you might know , the applicable TDS rates are thus :

194C	Contracts to Transporter, who has provided a valid PAN	0*
	Contracts to Individuals/HUF	1
	Contracts to others	2

Could you please elaborate who all falls under the "Transport Contractor" category?

Our nature of business is freight brokerage for export shipments of our Indian clients. Can we be included in the Transport Contractor category or do we fall under "Contracts to Others" ?

Shailly

Consultant

59 Points Joined July 2009

Transport Contarctors are any person in business of plying,hiring or leasing goods carriages.now can u please explain a litle more about the nature of your business

sujith

Finance & Operations

26 Points Joined November 2009

Our clients are manufacturers and exporters. We book their cargo for sea and air shipments. So we book containers on our clients' behalf for moving their goods from India to abroad.

What I am trying to understand is if the role of a "Transporter Contractor" as defined by TDS guidelines limited to moving goods within India or does it also extend to us who moves the goods on behalf of our clients from India to overseas?

Shailly

Consultant

59 Points Joined July 2009

Sujith,

Since your work nature does not fall under Transport Contractors,that is to say you fall under normal contractor so TDS will be deducted at 2% /1% as the case may be.Now the only solution i see is to apply for lower rates to the department.