Section 194C(6) provides exemption to small good carriage contractor/transporter (owning not more than 10 goods carriage at any time during the previous year) on furnishing of PAN along with the declaration to that effect to deductor from TDS.
The sub-section (6) of section 194C reads as under : –
“No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum”.
The issue that arises is whether freight paid to auto-rickshaws for transport within city or freight paid to public buses for transport to some other city will be covered in the term “goods carriage” as defined in clause (ii) of the Explanation to Section 194C.
Clause (ii) of the Explanation to Section 194C reads as under: –
“goods carriage shall have the meaning assigned to it in the Explanation to sub-section (7) of section 44AE”
Explanation to sub-section (7) of section 44AE reads as under: –
“the expression “goods carriage” shall have the meaning assigned to it in section 2 of the Motor Vehicles Act, 1988 (59 of 1988)”
Sub-section (14) of section 2 of the Motor Vehicles Act, 1988 reads as under : –
“goods carriage” means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.
The above definitions give rise to following views: –
a) Auto-rickshaws and buses when used for transporting goods will be covered under the definition of goods carriage and will be liable to provide their permanent account number for non-deduction of tax at source.
b) The sub-section (6) was introduced for transporters, and Auto-rickshaw driver and bus driver are not commonly known as transporter.
It is suggested to provide a suitable clarification to the issue raised ie whether or not auto rickshaws and/or buses used for transportation of goods are covered under the definition of goods carriage and hence is not liable to TDS under section 194C(6) upon furnishing PAN along with the declaration of small transport operator to the deductor.
Under the existing tax deduction provisions, it has not been specifically provided whether payment of hire purchase installments would attract tax deduction. The hire purchase installments comprise of principal & hire finance charge element.
Specific amendment may be made to exclude requirement of deduction of tax on the finance charge u/s 194A or 194-I.