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Tds and service tax on transporter

30 October 2014

In our organisation local vehicle owner are hired for material transportation to small buyers and their daily cartage amounts to Rs.300 or Rs.500 etc approximately their payment is say Rs.17000 for a month.My queries are:-
1)Whether for TDS non applicability PAN no is required in this case also (as tds is not applicable if pan no, is available)?No bill also is received.
2) If no need to obtain the bill as these are small transporters then there is no need to pay service tax on the same?

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4 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 30 October 2014

In your case check whether aggregate of payments made to those transporters exceed 75000 per person in a year. If so obtain PAN then no need to deduct T.D.S and regarding service tax, to apply service tax provisions on reverse charge mechanism basis, they shold be a Goods Transport Agency and Issue consignment note for service rendered. In your case as they are Individuals and i think they will not issue any bills to you, no liability on you regarding service tax aspect. Indeed service tax provisions will apply in case where amount paid for each carriage exceeds Rs.750, hence no problem.

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CA Parul Saxena (CA) (8488 Points)
Replied 30 October 2014

Please clarify 2 things:-

1. If amount paid to single Individual is below Rs.75000 even then there is need to obtain PAN so that we can say that we have PAN and hence TDS is not deducted.

2.First you said as he is individual then no need of service tax then you said limit of Rs.750 is applicable even in this case so service tax is applicale,.....please clarify whether service tax is leviable or not??

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 30 October 2014

As per service tax provisions, Reverse charge mechanism will not apply incases where both Consignor and Consignee is Individual/Firm/H.U.F and where frieght amount for single carraige does not exceed rs.750 and where transporter is not a goods transport agency and does not issue any Consignment note and where the frieght is paid for transportation of Vegatables, Milk and eggs and other perishable goods.

In case of T.D.S provisions, if you are liable to deduct T.D.S if you obtain PAN no need to deduct T.D.S what ever the amount paid by you to transporter whether transporter is individual or not.

You need to obtain either PAN no of Lorry Driver or PAN no of Lorry owner

CA Parul Saxena (CA) (8488 Points)
Replied 30 October 2014

Please dont explain the provision i know the provision i am just asking because of practical difficulty......say a local truck is hired then how can i obtain PAN?