Tds on contractor (194c)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 February 2017 Respected Sir/Ma'am,

During the current financial year, one of transporter had given declaration that he own less than 10 trucks as on 1st April, 2016 but now in February, 2016 transporter revised their declaration and now declared that he own 12 trucks now.

the query is whether i am liable to deduct TDS on entire payment made to transporter during the current year or not required to deduct any TDS considering the provision of section

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, 6[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.

please clarify

Labhansh Financial

Labhansh Financial (Expert)
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03 March 2017 Sec 194C(6) reflects poor drafting skills on part of the department. The payer would not be at fault in you case if he does not deduct TDS.

However, this is not the intent of the statute. Circular no. 19/2015 dated 27.11.2015 explaining the amendment to sec 194C(6) in its paragraph 43.5 states that TDS shall be deducted on subsequent payments once the transporter becomes owner of more than ten goods carriages.

Advice - To be on the safer side of the law deduct TDS from the payments made subsequent to the transporter becoming owner of more than 10 goods carriages. This would save you from unnecessary litigation, if any.

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