TDS on Transportation Charges

CA Sahil Singla.. (Service Tax ) (3746 Points)

06 March 2011  


My client didn't deducted TDS on transportation charges paid by it to any of the transporters claiming that the transporters are having PAN No. But in case of one transporter he deducted TDS on 100000 at the rate of 2 %.  According to me TDS should be deducted at the rate of 20% as per recent notifications. When i asked the reason for such act on the part of client , he told that the transporter is having PAN No., so he need not deduct TDS. So according to  him deducting TDS at the rate of 2% is having no problem.

But my contention is if TDS is to be deducted on Transportation Charges then it should be deducted at 20% , bcoz now there is no such rate of 2% on transportation Charges.