TDS on Freight charges

This query is : Resolved

Lakshmi Sonaimuthu (Querist)
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20 June 2009 Dear all,

Can anybody clarify the foll. doubt.

Transport charges charged in the Purchase bill by the supplier. Whether TDS to be considered for the Freight when it exceeds 50,000/- in a year.

Kindly clarify your reply to finance@jove.co.in

CA.SHAHZAD SAYYED

CA.SHAHZAD SAYYED (Expert)
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20 June 2009 Dear Lakshmi
As per Sec. 194C, TDS is to be deducted if a single payment exceed Rs.20000 or aggregate payment of freight exceed Rs.50000 in a FY

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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20 June 2009 Provided the freight is Ex-VAT i.e not forming part of sale price.

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taxindiaconnect

taxindiaconnect (Expert)
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20 June 2009 The obligation to deduct TDS arises to a payer if he is making payment to a contractor. A bill of lading of a transporter is treated a contract for the purpose of section 194C. Accordingly TDS is required to be deducted from the payment made to a transporter as explained by earlier experts on this. The TDS need to be deducted by a person who is the in the privity of the contract. In your case TDS is required be deducted by the seller as he is making payment to the transporter, while you are just reimbursing the same to the supplier. In such a case in my opinion, No TDS is required to be deducted from the payment as the privity of contract is not between you and the transporter, but the supplier and the contractor. So no need to deduct TDS on this payment.