TDS on Custom Duty

 Customs Duty is a statutory liability (like service tax).Under sec.194I, there is an explicit circular that states that amount must include service tax for the purpose of TDS(CIRCULAR NO. 4/2008, DATED 28-4-2008). However no such circular is issed for 194C. Hence it can be inferred that customs duty must be included for TDS purposes under section 194C

Mr. Mukund

My question is, Is the Custom Duty is Liable for TDS deduction under sec. 194C at the time of the Custom Duty paid by the Agent on our behalf?

No. TDS is not required for reimbursement of customs duty.  The same is not an income of clearing agent.    In the agreement with clearing agent, the remuneration payable to him will be only for services for clearing & forwarding activities.  Customs duty is reimbursed based on supportings , proof of remittance ??.

no tds to be deducted on reimbursements of taxes paid on behalf of the company. However, tds should be deducted on commission charged for providing such services.

Dear Kirti,

          I give due respect to the point given by you. A specific circular has been issued for service tax under section 194(I) stating that S.T. must not be included. It is also a statutory liability. however, no such circular is issued for sec.194C.The act is silent regarding customs duty. had there beenan intention to exclude customs duty from 194C, ther would have been explicit circular(as in case of 194I)

Customs duty reimb will not attract TDS.  The same is not a remuneration for services rendered.  It is only a reimb.  Clearing agent pays by one hand and seeks reimb.  Customs duty is not payable by clearing agent for his clearing activities.   He is paying this on behalf of principal only.

In the case of 194 I (rent) , service tax liability exists on the service provider, on which no TDS is required, as per specific exemption.  Correct comparison will be a repair job on which service tax is also charged by contractor.  Here on the total bill value (incl service tax), TDS is recoverable u/s 194C.