TDS
This query is : Open
12 June 2009
Our company has paid oecan freight to Maersk, MSC I P. Ltd and to other liners.
Shall we deduct tds these payments. The freight amount invoiced in USD and then convert in to INR . we have paid in INR.
Kindly advise
Shall we deduct tds these payments. The freight amount invoiced in USD and then convert in to INR . we have paid in INR.
Kindly advise
12 June 2009
yes u have to deduct TDS @ 2% plus surcharge (if applicable ) plus education cess.
13 June 2009
the payment is to a resident company so TDS is to be deducted at applicable rate
13 June 2009
thanks for your reply. But i know from my friend the amount paid as ocean freight does not attract tds. It has a separate notification. he has promised to send me. After receiving it i will seek your advice once again. thank u once again bye
24 June 2009
Dear All,
I attached herewith Notification regarding TDS on ocean freight. Kindly clarify and advice
Section 172 l Shipping Business of Non-Residents
913. Tax deduction at source from payment made to foreign shipping companies
1. Representations have been received regarding the scope of sections 172, 194C and 195 of the Income-tax Act, 1961, in connection with tax deduction at source from payments made to the foreign shipping companies or their agents.
2. Section 172 deals with shipping business of non-residents. Section 172(1) provides the mode of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India. An analysis of the provisions of section 172 would show that these provisions have to be applied to every journey a ship, belonging to or chartered by a non-resident, undertakes from any port in India. Section 172 is a self-contained code for the levy and recovery of the tax, ship-wise, and journeywise, and requires the filing of the return within a maximum time of thirty days from the date of departure of the ship.
3. The provisions of section 172 are to apply, notwithstanding anything contained in other provisions of the Act. Therefore, in such cases, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. The recovery of tax is to be regulated, for a voyage undertaken from any port in India by a ship under the provisions of section 172.
4. Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. This section applies to payments made by a person referred to in clauses (a) to (j) of sub-section (1) to any resident (termed as contractor). It is clear from the section that the area of operation of TDS is confined to payments made to any resident. On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections.
5. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply.
Circular: No. 723, dated 19-9-1995.
I attached herewith Notification regarding TDS on ocean freight. Kindly clarify and advice
Section 172 l Shipping Business of Non-Residents
913. Tax deduction at source from payment made to foreign shipping companies
1. Representations have been received regarding the scope of sections 172, 194C and 195 of the Income-tax Act, 1961, in connection with tax deduction at source from payments made to the foreign shipping companies or their agents.
2. Section 172 deals with shipping business of non-residents. Section 172(1) provides the mode of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India. An analysis of the provisions of section 172 would show that these provisions have to be applied to every journey a ship, belonging to or chartered by a non-resident, undertakes from any port in India. Section 172 is a self-contained code for the levy and recovery of the tax, ship-wise, and journeywise, and requires the filing of the return within a maximum time of thirty days from the date of departure of the ship.
3. The provisions of section 172 are to apply, notwithstanding anything contained in other provisions of the Act. Therefore, in such cases, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. The recovery of tax is to be regulated, for a voyage undertaken from any port in India by a ship under the provisions of section 172.
4. Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. This section applies to payments made by a person referred to in clauses (a) to (j) of sub-section (1) to any resident (termed as contractor). It is clear from the section that the area of operation of TDS is confined to payments made to any resident. On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections.
5. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply.
Circular: No. 723, dated 19-9-1995.
27 June 2014
Very true Mr. Samidurai, also there are letters issued by International Taxation Commissioner for non-deduction of TDS. But since those certificates no. doesnt match the department criteria, and if they are shown in TDS return then notice for Short Deduction of TDS is received.
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