TDS on Transport cost incurred on Sale of Goods
This query is : Resolved
30 May 2008
Hi Frnds,
Actually I'm on an Audit of a company.
This Company Sale goods to its clients & pay transport cost on behalf of its client & then raises a Debit note on its Client to Reimbursh the Transport cost incurred on behalf of them.
So My Querry is as under:-
1)As transport is a type of Contract which falls u/s 194C. So wheather its the liability of the selling Company to deduct TDS on Transport Cost @2.06% or it is the Duty of the Purchasing company to Deduct TDS.
2) The Accountant of the Company is saying that we are not responsible for deducting TDS as it is not actually there EXP. as they are reimburshing this EXP from Client.
3) So please tell me how to deal with this situation.
Actually I'm on an Audit of a company.
This Company Sale goods to its clients & pay transport cost on behalf of its client & then raises a Debit note on its Client to Reimbursh the Transport cost incurred on behalf of them.
So My Querry is as under:-
1)As transport is a type of Contract which falls u/s 194C. So wheather its the liability of the selling Company to deduct TDS on Transport Cost @2.06% or it is the Duty of the Purchasing company to Deduct TDS.
2) The Accountant of the Company is saying that we are not responsible for deducting TDS as it is not actually there EXP. as they are reimburshing this EXP from Client.
3) So please tell me how to deal with this situation.
30 May 2008
you will deduct tds on behalf of your client pay to the govt in the name of the client or told to the client to deduct tax pay to the govt & issue the certificate to the transportar
30 May 2008
But when the goods are sold Sale Bill already include the amount of Transportation Charges as Freight outward and VAT is charged by the company taking into consideration freight charges.
So when the transport of goods will take place then again we will have to deduct tax in form of TDS and the Double Taxation will take place as VAT is already paid on Freight outward.
So what is your view about this accounting treatment. Is it correct or wrong according to you.
And as you have answer my question that deduct tds on behalf of your client pay to the govt in the name of the client or told to the client to deduct tax pay to the govt & issue the certificate to the transportar. But transporter will raise bill in our name then how can our client make him payment.
So when the transport of goods will take place then again we will have to deduct tax in form of TDS and the Double Taxation will take place as VAT is already paid on Freight outward.
So what is your view about this accounting treatment. Is it correct or wrong according to you.
And as you have answer my question that deduct tds on behalf of your client pay to the govt in the name of the client or told to the client to deduct tax pay to the govt & issue the certificate to the transportar. But transporter will raise bill in our name then how can our client make him payment.
30 May 2008
But when the goods are sold Sale Bill already include the amount of Transportation Charges as Freight outward and VAT is charged by the company taking into consideration freight charges.
So when the transport of goods will take place then again we will have to deduct tax in form of TDS and the Double Taxation will take place as VAT is already paid on Freight outward.
So what is your view about this accounting treatment. Is it correct or wrong according to you.
And as you have answer my question that deduct tds on behalf of your client pay to the govt in the name of the client or told to the client to deduct tax pay to the govt & issue the certificate to the transportar. But transporter will raise bill in our name then how can our client make him payment.
So when the transport of goods will take place then again we will have to deduct tax in form of TDS and the Double Taxation will take place as VAT is already paid on Freight outward.
So what is your view about this accounting treatment. Is it correct or wrong according to you.
And as you have answer my question that deduct tds on behalf of your client pay to the govt in the name of the client or told to the client to deduct tax pay to the govt & issue the certificate to the transportar. But transporter will raise bill in our name then how can our client make him payment.
30 May 2008
in my opinion, liablity to deduct tds is of the party who pays to transporter, this is what is written in sec 194C. In this case, selling co. is paying to tpt., so it is liable to deduct tds. later reimbursement of exp. does not make any difference.
buyer is not paying to transporter, he is paying to selling co., which in no case can be considered as transporter, so i think he is not liable to deduct tds.
in some cases, selling party gives some advance to tpt. and balance is paid by buyer at delivery. in that case buyer can deduct tds on total freight (including advance). but in ur case, buyer has no ways to deduct tax, will the tpt. give him the tds amt? no.
tell the accountant that in sec 194C, it is nowhere mentioned that TDS is applicabie on that person, who will book the expenses. what is written in act is that the person who makes the payment to contractor is liable to deduct tax. (whether he books it as exp or not).
buyer is not paying to transporter, he is paying to selling co., which in no case can be considered as transporter, so i think he is not liable to deduct tds.
in some cases, selling party gives some advance to tpt. and balance is paid by buyer at delivery. in that case buyer can deduct tds on total freight (including advance). but in ur case, buyer has no ways to deduct tax, will the tpt. give him the tds amt? no.
tell the accountant that in sec 194C, it is nowhere mentioned that TDS is applicabie on that person, who will book the expenses. what is written in act is that the person who makes the payment to contractor is liable to deduct tax. (whether he books it as exp or not).
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05 June 2008
hi Frnd
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
05 June 2008
hi Frnd
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
05 June 2008
hi Frnd
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
05 June 2008
hi Frnd
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
As we cut TDS when we pay commission.
Now my querry is that:-
When new public Company is getting incorporated then who is responsible to deduct TDS when Underwriters are paid commission. As the Company is not yet incorporated & so the commission is paid to underwriters by the promoters of the company & the promoter being an individual cannot deduct TDS.
So in this case who will deduct TDS.
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