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Deduction of tds from freight paid in the f.y.2008/09

(Querist) 28 October 2011 This query is : Resolved 
Sir/Madam,
My client is a transporting contractor and lorry arranger. He transports the goods by heiring trucks {belonging to individual truck owner} for exporters who deduct his tds from the transporting charges paid to him. There is no contract between him and truck owners. Therefore, he has no deducted TDS while remitting payment to truck owners.
Whether he is liable to deduct TDS or not? Please, remit your valuable opinion.
Raj Kumar Makkad (Expert) 28 October 2011
He is fully liable for the TDS and if he has not deducted, it is his fault.
prabhakar singh (Expert) 29 October 2011
Yes!He is liable to deduct Tds and to deposit it timely.
Guest (Expert) 29 October 2011
Irrespective of whether there is no contract between him and truck owners, under the Indian Income Tax Act, the contractor has to make Tax Deduction at Source from payments to truck owners, as Subcontractors under section 194C.

Tax should be deducted at source only if the contract is between the contractor/sub-contractor and the following specified persons:

1. The Central Government or any State Government.

2. Any local authority.

3. Any corporation established by or under a Central, State or Provincial Act

4. A company

5. Any Co-operative Society.

6. Any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.

7. Any Society registered under the Societies Registration Act, 1960 or any law corresponding to that Act in any part of India.

8. Any Trust.

9. Any University established by or under any Central, State or Provincial Act or any institution declared to be a University under the University Grants Commission Act.

10. Any firm.

11. Any individual or Hindu Undivided Family whose books are required to be audited under section 44AB during the immediately preceding financial year. [The turnover from business/profession exceeds the limits specified u/s 44AB during the immediately preceding financial year].

12. Association of persons or Body of Individuals, whether incorporated or not, whose books are required to be audited under section 44AB during the immediately preceding financial year.

SO, IN THIS PARTICULAR CASE, YOU MAY NEED TO CHECK WHETHER YOUR CLIENT FALLS WITHIN THE CATEGORY MENTIONED AT SL. 11 OR 12 ABOVE OR NOT.

However, you may also need to take care of the following provision in respect of individual truck owners:

In the case of payments to transporters, each GR can be said to be a separate contract, if the goods are transported at one time. But if the goods are transported continuously in pursuance of a contract for a specific period or quantity, each GR will not be a separate contract and all GRs relating to that period or quantity will be aggregated for the purpose of TDS. Even when the goods are received on ‘freight to pay’ basis, the TDS provisions would be applicable, irrespective of the actual payment. [Circular No.715 dt.8-8-1995].
Raj Kumar Makkad (Expert) 29 October 2011
Nothing remains to be cleared now after detailed reply of Dhingra ji.
prabhakar singh (Expert) 29 October 2011
and that gives us opportunity of add also.
B.Chakrapani Warrier (Expert) 29 October 2011
Tds provisions does not apply in the case of plying,hiring or leasing good carriages if the contractor furnishes his /her permanent account number to the person paying the sum. Pl refer section 194C(6) of the Income tax Act,1961.
Shailesh Kr. Shah (Expert) 29 October 2011
Shri B.Chakrapani solved the issue of author.
Ganesh babu (Expert) 11 May 2013
PLEASE REFER 194C SUBSECTION 6. TDS IS EXEMPTED ON TRANSPORTATION ON GOODS.

HOWEVER IT IS DUTY OF SERVICE RECEIVER TO INCLUDE THIS NIL DEDUCTION DETAILS IN TDS RETURN AS PER AMMENDED INCOMETAX RULE 31A
PLEASE REFER MY EXPLANATION ON THIS THROUGH BELOW LINK
http://www.caclubindia.com/share_files/inclusion-of-transporter-details-in-tds-return-56557.asp


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