In the complex world of income taxation, specific provisions enable transporters to enjoy benefits related to Tax Deducted at Source (TDS). One such provision, the declaration under section 194C(6) of the Income Tax Act, 1961, allows transporters owning ten or fewer goods carriages to claim non-deduction of TDS. Moreover, there’s Form 13 that acts as a provision for those not covered under section 194C(6). This guide offers a comprehensive overview of both these aspects, aiming to clarify the nuances, requirements, and the benefits of adhering to them.
If you are a transporter who owns ten or less goods carriages and you receive payments from a payer for plying, hiring or leasing your vehicles, you may be eligible for non-deduction of tax at source (TDS) under section 194C(6) of the Income Tax Act, 1961. However, to avail this benefit, you need to furnish a declaration to the payer along with your Permanent Account Number (PAN).
The declaration under section 194C(6) is a statement that you make to the payer that you do not own more than ten goods carriages at any time during the previous year and that you are engaged in the business of plying, hiring or leasing goods carriages. The declaration should also contain your PAN, which is mandatory for claiming the benefit of non-deduction of TDS.
The declaration can be made in any format, as long as it fulfils the requirements of the section. However, some illustrative formats are available on various websites, such as and. You can also refer to the extract of section 194C(6) of the Income Tax Act, 1961 given in .
The declaration should be furnished to the payer before the end of the financial year or before the date of filing of return of income by the payer, whichever is earlier. You should also keep a copy of the declaration for your own records.
Form 13 is an application for obtaining a certificate from the Assessing Officer for lower or no deduction of tax at source under section 197 of the Income Tax Act, 1961. If you are not eligible for non-deduction of TDS under section 194C(6), or if you own more than ten goods carriages at any time during the previous year, you can apply for Form 13 to get a lower or nil rate of TDS on your payments.
To apply for Form 13, you need to fill up the form online on the e-filing portal of the Income Tax Department (https://www.incometaxindiaefiling.gov.in) and submit it along with the relevant documents and fees. The Assessing Officer will issue a certificate specifying the rate or amount of TDS to be deducted by the payer after considering your income and tax liability.
You should furnish the certificate to the payer before the deduction of tax at source. The certificate will be valid for the period specified in it or until it is cancelled by the Assessing Officer.
Complying with section 194C(6) and Form 13 can help you avoid unnecessary deduction of tax at source on your payments and reduce your tax liability. It can also help you avoid any penalties or interest for non-furnishing of PAN or declaration, or for furnishing incorrect information.
If you fail to comply with section 194C(6) and Form 13, you may face the following consequences:
– The payer may deduct tax at source at the rate of 20% or higher, as per section 206AA of the Income Tax Act, 1961.
– The payer may disallow your expenses under section 40(a)(ia) of the Income Tax Act, 1961, if you do not furnish your PAN or declaration.
– The Assessing Officer may levy a penalty of Rs.10,000 under section 272B of the Income Tax Act, 1961, for each default of non-furnishing or furnishing incorrect PAN or declaration.
– The Assessing Officer may levy interest under section 201(1A) and/or penalty under section 271C or 271CA of the Income Tax Act, 1961, for non-deduction or short deduction of tax at source.
Conclusion: The Income Tax Act, 1961, offers specific avenues for transporters to reduce their tax liabilities and ensure smoother financial transactions. Both the declaration under section 194C(6) and Form 13 serve this purpose. By understanding and complying with these provisions, transporters can avoid excessive TDS deductions, potential penalties, and interest charges. In a world where every rupee counts, it is imperative to be well-informed and proactive in ensuring compliance with tax laws to maximize one’s financial benefits.