Varun Dhawan

TDS on Payments to Transporters- Amendment to Section 194C w.e.f. June 1, 2015 + Undertaking Format

Introduction

Section 194C of the Income Tax Act, 1961 prescribes that any payment to a contractor is subject to a Tax Deduction at Source (TDS) at the rate of:

  • 1% in case the payee is an Individual or a Hindu Undivided Family, and
  • 2% in case of other payees (i.e. partnership firm, company, trust, body of individuals or association of persons)

if such payment exceeds Rs. 30,000 per contract or aggregate of such payments of contracts in a financial year exceeds Rs. 75,000.

TDS on account of a contractor during the course of plying, hiring and leasing goods carriage

Earlier Provision

The earlier provision (upto May 31, 2015) provides that no deduction of tax is required from payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his PAN to the payer.

New Provision effective June 1, 2015

The new provision of Section 194C, as was informed earlier at the time of the Union Budget, restricts the cases for non-deduction of tax. Non deduction of tax will be available only for small transport operators owning not more than 10 goods carriages.

The relevant extract of the amended provision is as under:

“Section 194C

Sub section (6)

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 plying, hiring and leasing goods carriages, where such contractor owns ten or less goods carriage 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.”

This provision comes into force from June 1, 2015.

Analysis:

If transporter is not owning more than 10 goods carriage at any time during the previous year, then we, as payers (Tax deductors) have to obtain a declaration from transporter along with his copy of PAN before credit or payment to transporter, whichever is earlier.

Download Format of Declaration to be obtained on the letter head of the Transport Contractor in case of non-deduction of tax at source u/s 194C (6) of the Income Tax Act, 1961

If the transporter is owning more than 10 goods carriage at any time during the year, then we, as payers are liable to deduct TDS at the time of paying charges to goods transporter at the rate of 1% or 2% as the case may be; based on the transport contractor’s status which can be identified from the 4th alphabet of the PAN.

Conclusion:

Effective June 1, 2015 TDS will be applicable at the rate of 1% or 2%, as the case may be, in the case of all payments made to a contractor during the course of plying, hiring or leasing of goods carriage, except in cases where such contractor has furnished a Declaration.

The tax deduction will be required to be done at the time of credit of the amount payable to the account of the contractor (or to any other account) or at the time of payment, whichever is earlier.

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Category : Income Tax (27501)
Type : Articles (16989) Featured (4062)
Tags : Budget (1956) Budget 2015-16 (272) Section 194C (146)

88 responses to “TDS on Payments to Transporters- Amendment to S.194C from 01.06.2015”

  1. ajay agarwal says:

    If a pvt ltd company (PLC) purchase 20 trucks and give it on HIRE to truck drivers to ply these trucks in its company to execute its contracts. PLC pays freight to these drivers for every trip. My queries are
    1) PLC charge Truck Hire Charges from these Drivers monthly…what is the impact of GST Truck Hire Charges
    2) Can these drivers give Declaration to PLC for not plying more than 10 trucks and this / these trucks not registered in their name but on HIRE
    3) Can PLC on basis of Declaration given by drivers can exempt TDS Deduction on Freight paid to these Drivers as they are plying less than ten trucks
    4) Some of these drivers are plying hired trucks as well as Owned trucks which are less than ten trucks during the year, still they can give Declaration to PLC and PLC can deducted 0% TDS on their freight charges.

  2. prema diagnostic centre says:

    i am a chairman for a service organization , i have to pay Rs.10000/- per month as a freight for various transporators . so, please tell us the tds % to deduct to that transporter on payment.

  3. harish says:

    dear sir, we are private limited firm we have 5 lorries, we may give declaration form for non deducting TDS amount on my frieght receivable, please tell me?

  4. Soumya Ranjan Sahu says:

    how much TDS need to deduct u/s-194C on payment made to a proprietor(as no clarification given in the section for that)

  5. Mahesh says:

    As a pvt ltd co., can we paid in the name of transport proprietorship (Like kishan transporter) even we received declaration in the name of individual…

  6. Aniket says:

    for Financial Year 2016-17, in which period should the transporter not own more than 10 t=vehicles?
    Is it FY 2016-17 or FY 2015-16??

  7. sathiesh kumar says:

    i am a salt whole sale trader. i am having any truck own in my name. but i must supply salt to my party with lorry hire. in this i am approaching a mediator to for lorry supply, but the mediator also not having any own truck. he is a agent and approaching for complete the order through so many trucks.
    in this if i deduct TDS to this agent.

  8. SAMALA KIRAN says:

    Sir, Our firm is Partnership firm having more than 200 trucks, some times we are hiring trucks from market people (They are not owners of the trucks) as per our requirement and paid hire charges to them, is TDS is applicable to them, if applicable what is the percentage

  9. Ashwini says:

    If under the same order i have supplied two times & transport charges incurreed 20,000 for each supply & transporter issue two separate invoices 20000/- & 20000/- then how much % TDS DEDUCTIBLE.

  10. V A Rathod says:

    If service tax is charged separately in the bill, then TDS deduction to be done only on basic amount and not on service tax. If bill is of gross value, i.e., not indicating service tax separately then deduct TDS on whole amount.

  11. DEVENDRA VERAM says:

    I AM PAYING TO THE TRANSPORTER WHO DOES NOT OWN MORE THAN 10 VEHICLES BUT HE HAS HIRED FROM OTHER PARTIES MORE THAN 100 VEHICLES AND PROVIDED ME. DO WE HAVE TO DEDUCT TAX ON HIS PAYMENT ?

    • Navinkumar Naicker says:

      i also have the same query. i.e what if transporter hires numerous vehicles and provides the same over and abvoe the 10 vehicles which he owns?

    • V A Rathod says:

      This is sort of a contract. Deduct TDS in accordance with 194C (non transporter). If you are paying him commission and direct payment to the main transporter (the one who owns 100 trucks), then deduct tds of main transporter and deduct tds u/s 194H on commission of middleman. This is only a general answers. Consult a professional and discuss the case with him. He can guide you better.

  12. HEERA PLAZA says:

    Sir, I want to know abt the Brocker ( i..e Commission agent who is in between payer and truck owner) , he has no his own vehicles , he just get the order from party and get vehicle from truck owner and send the material on his bill ( commission memo) , because he has no vehicles bt he hire more than 10 vehicles a day,
    What is the procedure for them….????

  13. Yogesh says:

    Please clarify about TDS Deduction – Basic value + Service tax = total TDS Amount wel be Deduction in total amount / Basic amount please help me.

  14. ABDUL SALAM says:

    Sir I am accountant in Transport Company. We are hire truck from market and we have 0 truck registered on our company name. then what is tds condition for us

    • aryan bhatia says:

      you have to deduct TDS while crediting the amount or paying the amount to the individual/entity from whom you are hiring trucks.

  15. PRATIK says:

    IF THE TRANSPORT CO. IS A PARTNERSHIP FIRM THEN THE TDS RULE OF DECLARATION IS APPLICABLE TO THE FIRM ?????

  16. SANJEEV says:

    SIR PLEASE REPLY :

    I AM PAYING TO THE TRANSPORTER WHO DOES NOT OWN MORE THAN 10 VEHICLES BUT HE HAS HIRED FROM OTHER PARTIES MORE THAN 100 VEHICLES AND PROVIDED ME. DO WE HAVE TO DEDUCT TAX ON HIS PAYMENT ?

    Please comment :

  17. Santosh patil says:

    TDS DEDUCTION CHART 2015-16 REQUIRED.

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