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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:

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

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)

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99 Comments

  1. SURAJ says:

    IF TRANSPORTER HAVING A 10 OWN VEHICLES BUT I AM PAYING HIM ONLY 15000/- ON SINGLE BILL AND 80000/- IN A F.Y. SHOULD I DEDUCT TDS OR NOT.

  2. SURAJ says:

    IF TRANSPORTER HAVING A 10 OWN VEHICLES BUT I AM PAYING HIM ONLY 15000/- ON SINGLE BILL AND 80000/- IN A F.Y. SHOULD DEDUCT TDS OR NOT.

  3. SHETTY says:

    In case a transporter owns more than 10 trucks and has provided declaration for the same,but the aggregate transportation service provided by them during the year is only 45,000..Is TDS Required to be deducted on the same as the amount does not exceed Rs.1,00,000/-.Please Reply.

  4. 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.

  5. 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.

  6. 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?

  7. 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…

  8. 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.

  9. 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

  10. 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.

  11. 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.

  12. 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 ?

  13. 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….????

  14. 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.

  15. 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

  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:

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

  18. Santosh patil says:

    In case transport amount including in purchase bill then TDS deduction by the party. Or In case purchase bill transport amount separate mentioned if TDS deduction by the party he was supplier only not a transporter please help me

  19. surendra kumar khemka says:

    I have a propwritership firm….l took a work of loading and transporting of coal with another pvt ltd firm in sub contract basis.they payment me after deduct the TDs in loading and transportation 1%…
    I hired pay loader and trucks for this work. I want to pay the hire charges of the payloder and trucks.
    I wanted to know from you how I pay them’ cash OR cheque and after deducted tds or without deducted TDs.

  20. ASHISH KEDIA says:

    We are engaged in the business of transportation of goods. We are taking the vehicles on rent from a broker. The broker – takes the vehicle from the market. We are making the payment to the broker and the broker is contemplating that since he is not the owner – the TDS u/s 194 C is not applicable to him & full amount should be paid to him without deducting the TDS. Please guide whether broker is covered under this section?

  21. Pradeep says:

    Sir, if payment made to transporter for frieght ,who owned the more than 10 trucks,before 1.06.2015 so I liable to deduct tax on earlier year expense or not?

  22. sunil n shah says:

    we owned a partnership firm last year but this financial year is now converted to proprietorship firm , i have to make a payment of Rs.39000/- to a transporter owing more than 15 trucks , at what rate should i deposit tds whteher its 1% or 2% ,

    second should i apply for a new TAN no.(for proprietorship firm) as we have old partnership firm TAN no…

  23. BHUPAL says:

    Sir,
    For A.Y. 2013-2014, the A.O. want to disallow the Transport Expenditure taking into reference Section 194C(7), i.e. for not furnishing to the Income Tax Authority the prescribed details.

    Is he correct to disallow the expenses just for failure of procedural aspect. Where in there is no loss to the revenue.

  24. rajib says:

    We are advice to a Govt organization to provide there Buses for a govt. programmer.After submission of bill which type of deduction is required.Pls Advice.

  25. Amit Mahipal says:

    Contractor need to do followings
    (1) Maintain book of accounts
    (2) Get account audited from chartered Accountant
    (3) Get declaration from small transporter
    (4) To deduct TDS of transporter who didn’t submit declaration
    (5) if your turnover is more than 1 crore in FY 1415. you need to submit audited account to income tax department

    Regards
    amt
    9999863662

  26. Name says:

    Sir, you have not covered situation where the transport agency just acting as a middle man. The transport agency hire trucks from truck owners and provide hem to required client. So TDS is deductable or not.

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