Varun Dhawan
Most of the time I observed that in the industry there are always be a confusion regarding application of Section 194C i.e. TDS on contract at the time of payment to the transporter. This is might be because of various amendments has been taken place since last so many year related to this specific point i.e 194C(6) and 194C(7). Hence today I will try to summarise the details of only these two smalls but very important sub-sections of Section 194C.
Article also contains 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
Extract of Sub-Section (6) and (7) of Section 194C of Income Tax Act, 1961
“194C – Payments to contractors
(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 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.
(7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed.”
Important Points – TDS under Section 194C on Payments to Transporters
1. This amended sub-section is applicable w.e.f. 01st April, 2015
2. The transporter for these sub-sections means person handling business of plying, hiring or leasing goods carriages.
3. The benefit of non-deduction of tax will be available only for small transport operators owning not more than 10 goods carriages.
Hence if the transporter owning not more than 10 goods carriages at any time during the year, provide his PAN alongwith the declaration then as a payer, you don’t have to deduct his TDS u/s 194C.
But if the transporter owning more than 10 goods carriages at any time during the year, then you, 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.
Note: The above mentioned rate i.e. 1% and 2% will be reduced to 0.75% and 1.50% respectively during the period starting from 14th May, 2020 to 31st March, 2021.
4. The person responsible for paying or crediting any sum to the such transporter shall furnish declaration along with PAN to the income-tax authority.
The link for the format of declaration is as under:
7. 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.
(Republished with Amendments by Team Taxguru)
Transport contractor a company has issued a certificate that they are not holding more than 10 transport vehicles, so no tax should be deducted. We have received the goods by trucks having different Nos. ( more than 20 different Nos.which he might have engaged from other vehicle owners, for business ) for which bills are raised by transport contractor.
Under the circumstances it prima facie appears that more than 10 trucks are used under the contract, though he has issued declaration, will there be my liability if no TDS is done, though declaration is issued by contractor? or we have to obtain declaration from orginal truck owner?
sir, pl. clarify this situation.Lorry belongs to Mr A and it has come to Hubli.A transport agent who is not owning trucks but acts as only agent for commission gives in his letter head/ freight slip to pay Rs 40000/- during night time where only cash is to be paid.Now, whether PAN and Declaration of Owner of truck is to be obtained or This Agent on whose direction amount is paid.
CANNOT ISSUE 15G/H IN SUCH CASES
Whether TDS is required to deducted when transporter does not own 10 goods carriages but limit of 10 goods carriages exceeds the limit when transporter hire the goods carriages.
In other words whether goods carriages taken on hire would included for the purpose of limit of 10 goods carriages.
In case the contractor not owning any goods carriages but provide the service of transportation after taking vechile on hire and the amount of transportation is also more than Rs20 Lakhs, whether the contractor eligible to give declaration in this particular case, please reply urgently. – See more at: https://taxguru.in/income-tax/tds-payments-transporters-amendment-section-194c-wef-june-1-2015-undertaking-format.html#sthash.vocQ5oV1.dpuf
Hello everybody
I am really confused, please please please help me out.
We are government contractors. We deal in transportation and handling of goods (i.e. we will supply trucks and labour to load/unload the govt. goods from one place to another).
Now, as such we own only 2 trucks but what we do is, we take a number of trucks on rent (from small – small truck owners, each owing not more than 3 to 4 trucks) and then use all the trucks taken together to carry out various govt. contracts that we take up.
In a single contract, we need to provide 50-60 trucks to govt. on daily basis (contract wise).
My question
1) Are we getting covered under section 44 AE ? If not, why not ?
2) Benefit (non deduction of TDS) under sec 194 C – is it available only to those people who are paying tax as per sec 44 AE ? If not, then are we eligible for taking this advantage as well ?
declaration should be on stamp paper or plain paper
Being a transport contractor do we have to deduct TDS from truck owners whose vehicles we use for our contracts.
Is TDS applicable if company pays to a driver?
Dear Sir,
I am labour contractor(Proprietary), I have provided labour to company, but company shows as a Transporter so they have deducted TDS @ 1%, it is wrong, So how will i have consider TDS Amount which is show under section 26AS.
If i have filed ITR for as a labour contractor but as per 26AS show i am a transporter so how can it possible, I am confused.
Dear Sir,
our firm is partnership firm.we have hiring loading taxi p.a.80000-90000/-
please suggest TDS to be deducted or not ?
i am not transporter,i am broker but my vehicel not more than ten but i hire other transporter vehicle so need the decration form
Dear sir
is there any applicability of TDS deduction on railway freight payment ?
Is TDS need to be deducted, if freight is charged on purchase bill?
Dear Sir,
We are Clearing and Forwarding Agents and we get approx 3% commission from the company we deal with. The company deducts 10% TDS on the commission. This commission is inclusive of payments to transporters on behalf of company, rent and remuneration.
My question is that when company has already deducted TDS on one part then do we again have to deduct TDS while making payments to transporter ?
Secondly, will my firm which is making the payment on behalf of company will deduct TDS or the main company ?
Thirdly, the bills are raised by the transporters in the name of company and since company has given the authority to make payments on their behalf, then who will deduct TDS ?
Please clear my doubts.
Sir,
1. We are transporter (partnership firm) having no GOODS VEHICLE.
Please suggest us can we submit declaration for non deduction of TDS to the party.
2. we have received declaration u/s 194c (6) from the lorry owner. please suggest us for its reporting to the department and quarterly TDS return.
non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business
of transport i.e. plying, hiring or leasing goods carriage and who is eligible to compute income as per the provisions of section
44AE of the Act (i.e a person who is not owning more than 10 goods carriage at any time during the previous year) and who has
also furnished a declaration to this effect along with his PAN.
It is quite clear from the data which you have provided that the transporter in your case is not filing any Income tax return by taking the advantage of section 44AE as he is not himself owning any goods carriage..
So the conclusion is you need to take a declaration from the transporter in which he will declare that he owns zero goods carriage.. But TDS would be deducted as he is not eligible to compute income as per provisions of Section 44AE as he doesnt own any goods carriage..
TDS would not be deducted in case the transporter owns one to ten goods carriages and simultaneously he computes his taxable income as per the provisions of Section 44AE of the Income Tax Act
Dear Sir
i am Transporter and not having a single vehicle. i am hire all vehicles from other Truck owner. can i declare the declaration and i am liable for TDS under section 194 C.
Dear Sir
i am Transporter and not having a single vehicle. i am hire all vehicles from other Truck owner. can i declare the declaration and can i liable for TDS deduct under section 194 C. please reply sir it’s urgent.
IF TRANSPORTER COME AMBITE OF TDS AND CONSIGNEE ALSO DEDUCTED TDS ON TRANSPORTATION BUT SOME TIME OVER WEIGHT CHALLAN ALSO COME MADE BY RTO ANS SAME CHARGED BY TRANSPORTER ON CONSIGNEE SO CONSIGNEE WILL DEDUCTE TDS ON CHALLAN OR NOT.???
Pls revert on above.
Thank’s
Shankar
i a transpoter giving transport bill of Rs. 3500.00 pm approx i.e 42000.00 annualy then i will deduct tds ???
Upto 10th of June 2015 we were owning 16 Goods Carriage out of which we sold 7 Goods Carriage on 10th June 2015. We shall be very much obliged if you kindly let us know whether we can submit declaration now to our customers for non deduction of tax from payment of our Freight Bills
Thanks & Regards
Biswa Nath Agarwal
Accountant
Union Roadways Corporation
Kolkata
Plz help !!!! I am transport contractor I have taken contract from one company to transport their material from mines to plant but I don’t have any vehicles on my name and i arrange all vechiles from outsource from single or double truck owner and submit one bill to company for payment of all trucks of then plz tell tds will be deducted in my case or not
We are a Partnership Firm engaged in the Business of Transport Contractors.
We are not owning any vehicles in our firm’s name. But engage vehicles regularly from our associates who are individual owners having one or two vehicles. We engage them on different days and aggregate amount paid to them on various trips through the year will be more than Rs.5,00,000/- (Rupees Five lacs). All of them are having PAN No.
I need clarification reg:-
1. As the Total amount paid to these individuals is exceeding Rs.75,000/- above is there is the need of deduction of TDS at the rates prescribed w.e.f 01.06.15.
2. At certain times we work as a medeaters (Commission agents) between One Contractor and the Lorry Owner. In this situation we are getting a meager amount of Rs.300/- per transaction. In this situation do we need to apply the TDS clause on both sides.
3. As per TDS criteria do we need to furnish details of TDS on quaterly basis or on an Annual Basis.
4.if we are taking vehicles from brokers,whose tds to be deduct.
Kindly let me know.
Certain places it is said to deduct TDS if yearly payment of hies to a particular person exceeds Rs.75,000/-. “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.and in some other places it shows that
“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.
– See more at: https://taxguru.in/income-tax/tds-payments-transporters-amendment-section-194c-wef-june-1-2015-undertaking-format.html#sthash.KD227TBu.dpuf
In our case we have received Declaration from Transporters who owns less than 10 trucks in previous year, also started deducting TDS in the month of June of such transporters who owns more than 10 carriages or not submitted Declaration.
Regarding that, now at the time of filling TDS Return we are going to submit data whose TDS is deducted. my question is that either we should submit data who had provided declaration or we should ignore it.
if we have to submit the data who had provided Declaration in form of Nil Challan, which flag we should consider at the time of TDS Return Filling.
Please Reply…
We are a Partnership Firm engaged in the Business of Transport Contractors.
We are not owning any vehicles in our firm’s name. But engage vehicles regularly from our associates who are individual owners having one or two vehicles. We engage them on different days and aggregate amount paid to them on various trips through the year will be more than Rs.5,00,000/- (Rupees Five lacs). All of them are having PAN No.
I need clarification reg:-
1. As the Total amount paid to these individuals is exceeding Rs.75,000/- above is there is the need of deduction of TDS at the rates prescribed w.e.f 01.06.15.
2. At certain times we work as a medeaters (Commission agents) between One Contractor and the Lorry Owner. In this situation we are getting a meager amount of Rs.300/- per transaction. In this situation do we need to apply the TDS clause on both sides.
3. As per TDS criteria do we need to furnish details of TDS on quaterly basis or on an Annual Basis.
Kindly let me know.
Certain places it is said to deduct TDS if yearly payment of hies to a particular person exceeds Rs.75,000/-. “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.and in some other places it shows that
“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.
In case the the transporter is a commission agent, and does not own any vehicle or does possess any vehicle. He provides services by taking trucks on commission basis than the declaration can be obtained from Him ?
Please reply.
If we have recd bills dated May-15 in the Month of June- will attract tds as per new circular. Pl advice.
We are a Partnership Firm engaged in the Business of Transport Contractors.
We are not owning any vehicles in our firm’s name. But engage vehicles regularly from our associates who are individual owners having one or two vehicles. We engage them on different days and aggregate amount paid to them on various trips through the year will be more than Rs.5,00,000/- (Rupees Five lacs). All of them are having PAN No.
I need clarification reg:-
1. As the Total amount paid to these individuals is exceeding Rs.75,000/- above is there is the need of deduction of TDS at the rates prescribed w.e.f 01.06.15.
2. At certain times we work as a medeaters (Commission agents) between One Contractor and the Lorry Owner. In this situation we are getting a meager amount of Rs.300/- per transaction. In this situation do we need to apply the TDS clause on both sides.
3. As per TDS criteria do we need to furnish details of TDS on quaterly basis or on an Annual Basis.
Kindly let me know.
Certain places it is said to deduct TDS if yearly payment of hies to a particular person exceeds Rs.75,000/-. “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.and in some other places it shows that
“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.
We are a manufacturer and hire small tempo (Auto Riksha) for carriage the goods, and tempo having no PAN No. so we can deduct TDS on there payments and what rate? But annual payments less than Rs. 75000.00 and only having single tempo/auto Riksha.
You tell us about it being chopped TDS only in Gujarat in other states Toh Toh not being chopped being cut back, who will earn if it is valid for everyone or free members only train itself will be chopped
please let me know the detail about
“person who is not owning more than 10 goods carriage at any time during the previous year”
Does it mean transporter not not owning more than 10GC during FY 2014-15 or FY 2015-16.
what if Detention charges is paid by the transporter and claim such amount in the bill can TDS also deducted on such amount paid by the transporter as a detention charges ??
The interpretation of sec 194c (6) as per Mr varun dhawan is not correct since hiring of vehicle and vehicle purchased on hire purchase are different.
Can get the form No 15g/15H from transport contractors for non-deduction of TDS in lieu of Declaration?
The amendment reads as
“___ where such contractor owns ten or less goods carriages at any time during the previous year and ___”.
In my opinion, this means that TDS need not be deducted from payments to a transportation contractor who owns ten or less goods carriages even for a day during the previous year.(This may lead to practical difficulties).
Request comments on correctness of this interpretation.
In Case The Person (Pvt Ltd Company) who is providing the transportation Service is Not the owner of Any Goods Carriage. But he is providing service by hiring Carriages from Individual truck Drivers. Lorry Receipt is in the name of Company, Payment is also made to the company by service Receiver. Then company pays the amount to Truck Driver. In the above situation who is responsible for Submission of Declaration. Please Reply.
What about bills of april & may
Is this applicable to proprietary firm or an individual concern. Already proprietary firm is burdened with lot of statutory obligations this one will be extra burden. Again one has to take a declaration in letterhead of lorry people which is a highly impossible as the lorry plying the goods never carry auch type of documents.
Yes, Because he does not have any vehicle. As the provisions says that at least the assessee is having a less than 10 vehicle, he can issue the declaration and take the benefit of not to deduct the TDS from Contract Receipts.
Dear Mr Atulkumar,
You will be required to take a declaration in this case as the transporter is not the owner or beneficial owner of the goods carriage but he has to mention this fact in the declaration itself.. Otherwise how will someone come to know about his ownership..
It is also mentioned in the budget speech that the non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business
of transport i.e. plying, hiring or leasing goods carriage and who is eligible to compute income as per the provisions of section
44AE of the Act (i.e a person who is not owning more than 10 goods carriage at any time during the previous year) and who has
also furnished a declaration to this effect along with his PAN.
It is quite clear from the data which you have provided that the transporter in your case is not filing any Income tax return by taking the advantage of section 44AE as he is not himself owning any goods carriage..
So the conclusion is you need to take a declaration from the transporter in which he will declare that he owns zero goods carriage.. But TDS would be deducted as he is not eligible to compute income as per provisions of Section 44AE as he doesnt own any goods carriage..
TDS would not be deducted in case the transporter owns one to ten goods carriages and simultaneously he computes his taxable income as per the provisions of Section 44AE of the Income Tax Act.
In case of a Transporter does not owe any motor vehicle, but provide service from hire vehicle. So he can give declaration and also it is right to book only his commission income on such vehicle attatchment
I have gone through your article in taxguru in respect of TDS on Transportation.
But I feel you have not address a major situation where the transport agency just acting as a middle man. The transport agency hire trucks from truck owner & sent them to required person. So pls clear that in such situation we need to deduct TDS or not.
Sir
Request for clarifications on the following points.
1. If bill dated before 1st Jun is processed for payment in Jun’15 (transportation done before 1st June) – TDS to be deducted or not ?
2. If the bill dated 1st June & on wards is passed in Jun’15 (transportation done before 1st June) – TDS to be deducted or not ?
In case the contractor not owning any goods carriages but provide the service of transportation after taking vechile on hire and the amount of transportation is also more than Rs.50 Lakh, whether the contractor eligible to give declaration in this particular case, please reply urgently
The biggest issue which will be faced by the Tax deductor would be as to whose TDS to deduct as Truck belongs to a different person and GR is of a different person who hires trucks from the market on commission basis. In this case who will provide the declaration whether the driver or the GR provider. I suppose this type of ambiguity will always remain as Transport is an un-organised sector. Can anyone now resolve this issue.
Please clarify about that a person hiring the vehicles and send them to the needy(Deductor), then what the TDS applicability? Because that person is not the real owner of the vehicles he sent, but he is the contractor to provide vehicles to the Deductor. This is happened uniformly in our country. Please give clear picture upon this matter. Thanks in advance.
In your query you have not mentioned how many vehicles has the contractor taken n hire. According to me, in case the contractor has taken on hire more than 10 vehicles at any time during the year, then he will not be eligible for exemption u/s 194C (6). He will be deemed to be owner of the vehicles. For this please refer to Explanation to Section 44AE which states that an assessee who is in possession of a goods carriage, whether taken on hire purchase or on instalments, and for which the whole or part of the amount payable is due, shall be deemed to be the owner of such goods carriage.
What about the case where Trucks are owned in the name of the Partners and employed into the business of the Firm. Firm in its own name owns less than 10 Trucks.
In case the contractor not owning any goods carriages but provide the service of transportation after taking vechile on hire and the amount of transportation is also more than Rs.1 Crore, whether the contractor eligible to give declaration in this particular case, please reply urgently.