TDS on Wharfage - is it as per Sec194c or 194i - Income Tax

Ms.Aarti Pandey

I have requested you to provide me the meaning of "wharfage" as I do not know the meaning of that term. You have kindly sent me a message explaining the term "wharfage" as under:

"Wharfage is a fee charged for the use of a wharf or quay and wharf is a platform built out from the shore into the water and supported by piles; provides access to ships and boats. This is used when mother ships (big ships) are not able to be near the shore due to the depth of the ship and therefore daughter ships (small ships or boats) are used to carry the cargos and goods from these ships to the shore but till then the cargo is loaded and unloaded on wharf"

I bring to your notice the clarification given by the Central Board of Direct Taxes (CBDT) in the case of customers who use the space and services of a cold storage. In the said Circular the matter dealt was whether the charges/fees paid by customers to the owners of cold storage are subjected to deduction of tax at source under section 194I or section 194C of the Income-tax act, 1961. The CBDT has clarified that by usage of the space and services of a cold storage by the customers the customers are not tenants of the owner of the cold storage. The CBDT has clarified that there is a contractual agreement between the customer and owner of the cold storage for using the space and services for certain time. Hence the payments made to the owner of the cold storage for usage of space and services of the cold storage are to be subjected to deduction of tax at source under sectiion 194C.

Now in the case of the customers using "Wharfage" the circumstances are similar as in the case of customers of a cold storage. Hence the payments made for usage of wharfage are to be subjected to deduction of tax at source under section 194C.

To make the matter explicit I am herewith attaching the copy of the Circular.

Best Wishes

Sathikonda