TDS under 194C
This query is : Resolved
30 June 2011
Dear All
This is regarding the TDS provisions of the Income Tax Act,1961 (Pl. Ref Section 194C).
Our client is a sugar factory, there are number of individual transporters (individual truck owners) for the carriage of sugar cane from the farmers place to the factory. They all have provided the Permanent Account Number(PAN)with factory. Till the financial Year 2010-2011 the factory use to apply for the lower deduction on behalf of these transporters, and accordingly there was no deduction of tax.
Now as per the new amendments [Sec 194c(6)] we are thinking that not to deduct any tax from the payments made to the transporters, as the amended sub section 6 of 194C provides that
"No deduction shall be made from any sum credited or paid or likely to be
credited or paid during the previous year to the account of a contractor during
the course of business of plying, hiring or leasing goods carriages, on furnishing
of his Permanent Account Number, to the person paying or crediting such sum."
Now my doubt is that
1) whether the factory can treat these individual transporters as person eligible under this sub section 6 of 194C.
2)Whether the factory can, after obtaining the PAN from all these transporters take the decision to not to deduct the tax?
3)whether the above contract to carry the sugar cane from farmers place to factory will be the contract during the course of business of plying, hiring or leasing goods carriages?
Thanks in Advance
This is regarding the TDS provisions of the Income Tax Act,1961 (Pl. Ref Section 194C).
Our client is a sugar factory, there are number of individual transporters (individual truck owners) for the carriage of sugar cane from the farmers place to the factory. They all have provided the Permanent Account Number(PAN)with factory. Till the financial Year 2010-2011 the factory use to apply for the lower deduction on behalf of these transporters, and accordingly there was no deduction of tax.
Now as per the new amendments [Sec 194c(6)] we are thinking that not to deduct any tax from the payments made to the transporters, as the amended sub section 6 of 194C provides that
"No deduction shall be made from any sum credited or paid or likely to be
credited or paid during the previous year to the account of a contractor during
the course of business of plying, hiring or leasing goods carriages, on furnishing
of his Permanent Account Number, to the person paying or crediting such sum."
Now my doubt is that
1) whether the factory can treat these individual transporters as person eligible under this sub section 6 of 194C.
2)Whether the factory can, after obtaining the PAN from all these transporters take the decision to not to deduct the tax?
3)whether the above contract to carry the sugar cane from farmers place to factory will be the contract during the course of business of plying, hiring or leasing goods carriages?
Thanks in Advance
30 June 2011
ANSWER TO ALL QUESTIONS IS YES
CA MANOJ GUPTA
JODHPUR
09828510543
CA MANOJ GUPTA
JODHPUR
09828510543
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30 June 2011
First of all the factory cannot apply for lower deduction of tax or no deduction of tax on behalf of the transporter u/s 197. Lower deduction certificate is issued to the person who wants to get his tax deducted at lower rate.
As regards amendment in the provisions you can take the advantage and Manoj Guta has rightly given you the answer as YES.
As regards amendment in the provisions you can take the advantage and Manoj Guta has rightly given you the answer as YES.
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