25 May 2022
GOODS TRANSPORT AGENCY HAVE LESS THAN 10 VEHICLE BUT THEY ALSO HIRE VEHICLE FORM MARKET. THEY GIVE DECLARATION FOR NON DEDUCTION OF TDS AS THEY HAVE LESS THAN 10 VEHICLE. IN THAT CASE TDS IS DEDUCTABLE OR NOT?
11 July 2024
If a Goods Transport Agency (GTA) hires vehicles from the market in addition to using their own vehicles, the determination of whether TDS (Tax Deducted at Source) is applicable depends on specific provisions under the Income Tax Act, 1961. Here’s the clarification based on the scenario you described:
### TDS Applicability for GTA:
1. **Own Vehicles vs. Hired Vehicles:** - As per Section 194C of the Income Tax Act, TDS is required to be deducted at the rate of: - 1% for payments to a contractor for transport of goods (if the contractor is an individual or HUF). - 2% for payments to a contractor for transport of goods (if the contractor is other than an individual or HUF). - This TDS provision applies if the aggregate amount paid or credited to the contractor exceeds ₹30,000 in a single payment or ₹1,00,000 in aggregate during the financial year.
2. **Definition of GTA:** - A Goods Transport Agency (GTA) is defined under Section 194C as any person who provides services in relation to transport of goods by road and issues consignment note, whether or not they own or hire vehicles.
3. **Exemption from TDS:** - According to Circular No. 715 dated August 8, 1995, and subsequent clarifications, a GTA is not required to deduct TDS under Section 194C if they operate less than 10 goods carriage vehicles during the previous financial year. This exemption applies regardless of whether the GTA owns the vehicles or hires them.
4. **Declaration for Non-Deduction:** - If a GTA operates fewer than 10 goods carriage vehicles, they can provide a declaration in Form No. 27C to the person making the payment (like the customer or the person availing their services) stating that TDS should not be deducted on payments made to them under Section 194C.
### Conclusion:
Based on the above points: - If the GTA has less than 10 goods carriage vehicles, whether they are owned or hired, they are eligible to provide a declaration in Form No. 27C to the service recipient for non-deduction of TDS under Section 194C. - Therefore, in your case, if the GTA has provided such a declaration and they indeed operate fewer than 10 goods carriage vehicles, TDS should not be deducted on payments made to them for transport services under Section 194C of the Income Tax Act.
It’s advisable to maintain proper documentation, including the Form No. 27C declarations, to ensure compliance with tax regulations and to support the non-deduction of TDS in case of any scrutiny or audit by tax authorities.
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