TDS ON RENTAL COLD STORAGE CHRG

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2010 WE ARE KEEPING OUR FINISHED FOOD(EATABLE) PRODUCT IN RENTAL COLD STORAGE IS IT SUBJECT TO TDS .

WE ARE PAYING MORE THAN 50000/- RENT TO COLD STORAGE IN A YEAR. IF SUBJECT TO TDS HOW MUCH TDS SHOULD BE DEDUCTED?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 July 2010 TDS TO BE DEDUCTED U/S 194I @ 10%.

EXEMPTION LIMIT:
UPTO 30.06.2010 RS.120000/- PER YEAR
FROM 01.07.2010 RS.180000/- PER YEAR

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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27 July 2010 Since the arrangement between the customers and cold storage owners are basically contractual in nature, the provisions of section 194C will be applicable to the amounts paid as cooling charges by the customers of the cold storage.

Ref:-CBDT Circular No. 1 dated January 10,2008

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CA Sanat Pyne

CA Sanat Pyne (Expert)
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27 July 2010 the clarification given by the Central Board of Direct Taxes (CBDT) in the case of customers who use the space and services of a cold storage. In the said Circular the matter dealt was whether the charges/fees paid by customers to the owners of cold storage are subjected to deduction of tax at source under section 194I or section 194C of the Income-tax act, 1961. The CBDT has clarified that by usage of the space and services of a cold storage by the customers the customers are not tenants of the owner of the cold storage. The CBDT has clarified that there is a contractual agreement between the customer and owner of the cold storage for using the space and services for certain time. Hence the payments made to the owner of the cold storage for usage of space and services of the cold storage are to be subjected to deduction of tax at source under sectiion 194C.
Now in the case of the customers using "Wharfage" the circumstances are similar as in the case of customers of a cold storage. Hence the payments made for usage of wharfage are to be subjected to deduction of tax at source under section 194C.

CA Sanat Pyne

CA Sanat Pyne (Expert)
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27 July 2010 Clarification regarding applicability of provisions of Section 194-I to payments made by the customers on account of cooling charges to the cold storage owners
CIRCULAR NO. 1/2008, DATED 10-1-2008
Representations have been received from various quarters regarding applicability of the provisions of Section 194-I to cooling charges paid by the various customers to the owners of cold storages. It has been represented that the cold storage owners provide a composite service, which involves preservation of essential food items including perishable goods at various temperatures suitable for specific food items for required periods and storage of goods being incidental to the activity of preservation. The cooling of goods is controlled through mechanical process. The customer brings its packages for preservation for a required period and takes away its packages after paying cooling charges. The customer does not hire the building, plant/machinery etc. in any manner and does not become a tenant of any kind.
2. The matter has been examined. The main function of the cold storage is to preserve perishable goods by means of a mechanical process, and storage of such goods is only incidental in nature. The customer is also not given any right to use any demarcated space/place or the machinery of the cold store and thus does not become a tenant. Therefore, the provision of 194-I is not applicable to the cooling charges paid by the customers of the cold storage.
3. However, since the arrangement between the customers and cold storage owners are basically contractual in nature, the provision of section 194-C will be applicable to the amounts paid as cooling charges by the customers of the cold storage. This may be brought to the notice of the Assessing Officers under your charge.

F.No.275/59/2007-IT(B)

Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2010 if section 194-c applicable how much tds i have to deduct? i just received invoice tomorrow(26/7/2010) for preservation chrg from march 2010 to jul 2010.

they have chrg monthly for e.g inv no 1 (march - apr) amt 19000/- invdt -2jun2010 . inv no 2 amt 19000/- imvdt 2jun2010. inv dt 3 amt 18000/- inv dt 23 jul 2010 . in this circumstances how ihave to deduct tds as well as which date i have take in for booking?????????

Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2010 pls solve this query

CA Sanat Pyne

CA Sanat Pyne (Expert)
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27 July 2010
for individual & huf 1%
For other deduct 2%.
It is better to book on the invoice date.

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CA Sanat Pyne

CA Sanat Pyne (Expert)
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27 July 2010 metion the status of of the cold storage owner?
on that basis exact amount of tds will be provided.

Querist : Anonymous

Querist : Anonymous (Querist)