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TDS on freight charges

jagadish (accountant) (64 Points)

17 September 2007

Dear sir,

A pvt company paying a freight charges of Rs 11,236 to a transporting agnecy which includes the service tax @ of 12.36% charged by the transporting agency.Could you tell us wheather the TDS has to be deducted on gross amount(ie 10,000+ service tax @ 12.36%) or on the net amount(ie 10,000) of freight charges??????????

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19 Replies

Rajesh Bajaj (433 Points)
Replied 17 September 2007

Tds on Gross Total

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Amit Pareek (Corporate Executive) (28 Points)
Replied 17 September 2007

The CIT (TDS), Mumbai has given a clarification under the Right to Information Act, stating that TDS is to be deducted on the amount inclusive of Service Tax. Thus it may be followed.

CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 17 September 2007

The intention of the statute is to collect TDS on freight but not on service tax. Hence TDS should be made on Rs.10000/-This is my opinion.

Dinessh Kumar (Articled Asst.,) (193 Points)
Replied 17 September 2007

As Mr.Saibaburao said intention is not to collect tds on service tax. But section 194C says that tds should be deducted on amount credited to the party. You are giving credit to party inclusive of service tax. and hence tds is on whole amount only.

CA Manoj Sahoo (Service-CA) (44 Points)
Replied 17 September 2007

Sec 194 C used tyhe word "Any sum" .The Any sum might be reimbursement of expenses with out bills , service TAx etc .So TDS is on Full amount .

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CMA Gul S (Program Manager) (5910 Points)
Replied 17 September 2007

Hi Service tax is something like Excise Duty and when we calculate Sales Tax we take the Gross value. In this case we should take the gross amount ie incl of Service Tax for TDS calculations

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 17 September 2007

on gross amount

(Guest)

TDS should be on 10000/- and not including service tax..

siddh (Article (Final Result waited)) (391 Points)
Replied 18 September 2007

jagdist first thing is that now u should not any amt of sevice tax to transporter,if u do so then service tax paid by u @ 3.09%,then tds will be deduct 10000 & if u pay s.tax to transportor then u should deduct tds on 10000+s.t.

(Guest)

In case of freight charges, liability of deposit of service tax lies with the person or co. who is receveing service from the service provider. So in case you are paying freight charges to any transport co. against their services then you should deduct TDS on the amount of their service after excluding the amount of service tax. Based on your query TDS would be deducted on 10,000/- only. You should deposit the amount of service tax to the govt. treasury and also can avail the credit of the same.

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Mallidi Ramabrahmananda Reddy (Profession) (166 Points)
Replied 19 September 2007

Elements of a single nature of payment shall not be segregated for TDS puropose. Hence gross is to be considered

sanjeev (Manager- Accounts/Tax/Finance) (229 Points)
Replied 21 September 2007

In the tax audit of some export companies what i have found that they are deducting the TDS on gross amount of freight. The basic logic behind this is that what our income tax act says to deduct TDS on the amount credited to the account of payee(to whom payment is to be made). That's why if we credit the full amount to the acccount of our payee then TDS would be deducted on the amount credited which would include the element of service tax too.