TDS on Freight

In the case of one of my clients, while they purchase goods, for the purpose of transportation of the goods, the supplier who supplies goods to the client, contacts transport agency for trucks. The bill for the freight is issued by the transport agency. But the payment for the same is made to truck owners. The Transport agency only gets commission from truck owners. 
To whom is the client liable to deduct tax? Transport agency or truck owners? 

Replies (8)

The contract is only with the agency which organises transport of goods.The TDS should be made from out of payments made to the agency. It is not our concern to whom the agency pays as the interse contract is only between the payer and the agency.

Dear Vinayak,

           Payments to clearing and forwarding agents shall be liable to tax. Pls refer Circular No.713, dtd.02/08/1995

      

I agree with above answer

Yes TDS should be deducted U/s 194C from Transport agency.

yes should be deducted from the transport agency ....but if it is to be deducted only in case transporter dosent give his pan no.(from1.10.2009) if truck agency give hi pan no then no need to deduct tds ........if not then have to deduct tds at higher rate which is 20%
 

But the client makes payment to the truck owner. Not the commission agents. And the contract is between the supplier of goods and transport agency as it is the supplier who contacts the transport agency, not the client. 

Let the client make payment to any one mujchless the truck owner. The payment is made only to the agency and not to the truck owner. Only if the payment is individually made to the truck owners and if the truck owners furnish their PA number, then there is no ned to deduct tax. In this case as said earlier, TDS has, perforce to be made.

Payment of freight is made to truck owners itself. The problem is most of the drivers are themselves the owners of their trucks. They say they own only 1 truck and that they dont file their returns and hence dont have PA number. So we have to deduct tax.

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