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u/s 94C or 94H

22 June 2010

Hi,

My question is that the Payment made to C & F agent for the services rendered by him liable to deduct TDS under which section ..

Is It U/s 94C or 94 H

Thanks

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17 Replies

(Guest)

yes, u are required to deduct tds..

vishal kapoor (a) (66 Points)
Replied 22 June 2010

thanks rohit..

i know it is req to deduct Tds My question is under which sec..?

AJAY SIMHA (CMA - final) (190 Points)
Replied 22 June 2010

it is deductible u/s sec 94C for payments made to any contractor and a C&F agent is one among them.

AJAY SIMHA (CMA - final) (190 Points)
Replied 22 June 2010

a small correction its not section 94C but 194C and section 194H deals with TDS on any commission paid other than insurance commission. here commission in general sense means any commissoion agaisnt sales.

(Guest)

oops...sorry yaar...I have not read the properly..

CA Vishal kapoor (Partner) (320 Points)
Replied 22 June 2010

thanks Ajay & Rohit..

our firm made a reimbursement of expenses incurred by C&F Agent (say loading & unloading,packing,travelling etc amounted to rs 25000.)& pay agency charges rs 5000 plus Stax..

my question is ,while deducting TDS whether we include the expenses incured by C& F Agent or not.?

thanks a lot 2 all

CA Suri Kota (Assistant Manager @ EY) (955 Points)
Replied 22 June 2010

I agree with Ajay because usually these kind of services are provided under contract basis ....so TDS has to be deducted under 194 C.

CA Vishal kapoor (Partner) (320 Points)
Replied 22 June 2010

i agree wid 94C..

what about expenses incured by C& F agent & we reimburse him..

whether these will be included or not??/

thanks

RAKESH (Almost CA) (2199 Points)
Replied 22 June 2010

yes it be included......

sandeepverma (don't make exuse for study) (304 Points)
Replied 23 June 2010

you should be deduct tds sec 194 c ( contract )

Praveen.S (Accountant) (47 Points)
Replied 23 June 2010

Yes It's come U/s 194C (Contract)

CA Naveen Kumar Mavi ( CA - JOB CS Final & Graduated B.COM(H)) (246 Points)
Replied 23 June 2010

TDS is deductible under 194C.

if brokerage is being paid to C & F agents then u need to deduct TDS under Section 194H.....

Generally in this trade when inter C & F agents transaction takes place they charge brokerage and on that brokerage TDS under sec 194H is deductable

Robin Kumar Gupta (profession) (179 Points)
Replied 23 June 2010

Yes,

You have to deduct TDS.

The Board has through Circular No.715 dated August 8,1995 that "any sum paid", reimbursement of actual expenses cannot be deducted from the bill and that such reimbursement will also have to be taken into account in deducting tax at source.

However, the issue of whether tax deduction will be attracted where such expenses are claimed through a separate statement stands unclarified by the Board

It is felt that if the expenses are claimed through a separate statement there will be no requirement to deduct tax at source, provided the deductor is satisfied that the expenses claimed as reimbursement are only the actual expenses incurred. If there is an element of profit, that is to say that if the reimbursement is not of actual expenses, tax will have to be deducted at source even if the expenses are claimed through a separate statement.

Please Refer question no 30 in the attached file.

Attached File : 12 tds on reimbursements.pdf downloaded: 118 times

CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN") (114215 Points)
Replied 23 June 2010

Clearing & Forwarding (C&F) services – TDS: Assessee applied Sec.194C in respect of payments made to C&F agents. Assessing Officer (AO) opined that such services are managerial in nature and Sec.194J is to be applied. Assessee was considered to be in default for short deduction. CIT (A) confirmed AO’s action. On appeal before the Hon’ble Delhi Bench of the Tribunal, it was held that C&F services were not professional or technical services as mentioned in Sec.194J and the same are pari materia to the services mentioned in Sec.194C. CBDT in its Circular No.720 dt.30.08.1995 provided that various provisions of Chapter XVII relating to TDS are mutually exclusive and any particular payment could be covered by a particular section to the exclusion of others. It was held that C&F services were covered only 194C and not 194J. Glaxo Smithklime Consumer Healthcare Ltd. vs. ITO (2007) 12 SOT 221(Del)