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TDS on freight

Naveen Gupta (CA ) (123 Points)

06 December 2010

Whether TDS is deductible on freight amount included in Purchase invoice payable to supplier???

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5 Replies

praveen (Chartered Accountant) (6971 Points)
Replied 06 December 2010

Yes it is applicable however as per the recent amendments you need not deduct tax if such a person states his PAN .

You only have to maintain a list of such parties and amount paid to them towards such extent. PAN can be quoted with such amounts to make a defence for non collection.

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CA ADY (Chartered Accountant) (43 Points)
Replied 06 December 2010

Payment of Freight does attract TDS provisions:

Please refer the following:

194C of Income Tax Act:

Any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof, whichever is earlier, deduct an amount equal to

(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family

(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein.

Works:

work shall include

(a) advertisement

(b) broadcasting and telecasting including production of programmes for such broadcasting or

telecasting

(d) catering

(e) manufacturing or supplying a product according to the requirement or specification of a customer by

using material purchased from such customer, but does not include manufacturing or supplying a

product according to the requirement or specification of a customer by using material purchased from

a person, other than such customer.

CA ADY (Chartered Accountant) (43 Points)
Replied 06 December 2010

Thank you Praveen .

I omitted that ammendment.

Naveen Gupta (CA ) (123 Points)
Replied 06 December 2010

@ Praveen: The applicability of non deduction of TDS when PAN no. is quoted is only when freight is paid to GTA & not to supplier.....

praveen (Chartered Accountant) (6971 Points)
Replied 06 December 2010

what i feel is it should fall under 194C if it falls then the above explanation shall hold good. If it does not fall under 194C there is no other section covering such a entry hence we need not deduct tax.