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Tax deduction on services of custom house agent

CA ARVIND MISHRA (AUDIT ASSISTANT) (34 Points)

14 May 2016

i want to know the TDS applicability section for services of custom house agent. At what percentage tax is required to be deducted on service charges of CHA.

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CA HAYEDAR SHAIKH (Practice ) (627 Points)
Replied 14 May 2016

TDS applicable under Head of Custom House Agent Bill on Status of Agent, which are as under:

U/s. 194C - Shipping Line Charges, Stamp Duty, Insurance etc.,
U/s. 194J - Survey and
U/s. 194C - CFS Charges, Cargo Transportation, Uploading Charges etc.

Condition 1 - If CHA Service Charges & Reimbursement Charges Bill Are Separate.

If Bill is Separate then TDS is not applicable to CHA but if we lift the veil because of "CHA is agent only" then expense addressed to Principal Company, then This Principal Co. is liable to deduct TDS on these
expenses and Co. should book expense on respective head. However Mode of deduction is not prescribed because all payment are routing through agent, but Co. should advise to agent to pay them ( respective exp ) net amount which is after deduction amount and claim only net amount for using his cash flow on behalf of Co, and Co. should transfer to CHA after tds deduction on that part the same net amount.

Condition 2 - If CHA Service Charges & Reimbursement Charges Bill Are Not Separate and it is Consolidated Bill

If Bill is not Separate then TDS is applicable on whole amount including this reimbursement amount irrespective of this, that he is agent. However expense head Co. should book expense head, as per their nature. Applicability of section will be 194C however department is asking some time it u/s 194J. Company can go ahead with 194C also based on judgement of time

TDS applicable under Head of Custom House Agent Bill on Status of Principal, which are as under:

U/s. 194C - Handling Charges, Service Charges etc.

Condition 3 - If CHA Service Charges & Reimbursement Charges Bill Are Separate.

TDS is applicable on this part in all case. As a Industry Practice they are deducting u/s 194C, but department is asking in many survey u/s 194J. Principal Co. can go ahead with 194C also based on judgement of time.