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TDS- Reimbursement of Shipment Expenses

AMEET KIMBAHUNE (Consultant) (87 Points)

23 July 2009

Hi Friends

My Client like any other undertakes its export activity through a shipping agent. In this course an advance is given to him to incur all incidental expenses and duties related to the shipment. Such expenses include certain obivious payments that ought to come under TDS like forklifting charges, etc. However, my client has been deducting TDS on just the agency charges of the agent, ruling out TDS on the other charges claiming it to be reimbursement.

Kindly advise with reference to your experience and the legal position in this regard.

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3 Replies

Anumanchipalli Sathikonda (Tax Consultant) (1559 Points)
Replied 24 July 2009

Mr. Ameet Kimbahune

Tax has to be deducted on the gross bill not on the net bill after reibursement of expenses. There are no cases decided in favour of the tax payer in this respect. The consequence is very serious i.e. disallowance of the impugned expenditure.

Best Wishes

Sathikonda

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VISHRANT (ARTICLE) (25 Points)
Replied 25 July 2009

for the said case section 194 C is applicable.

As per the wordings of the said section 'any sum paid to the contractor.....' TDS would be levied.

in my opinion if any sum which has been credited or paid to the contractor TDS should be deducted even if the said amount does not form the part of income of the contractor.

VISHRANT (ARTICLE) (25 Points)
Replied 25 July 2009

for the said case section 194 C is applicable.

As per the wordings of the said section 'any sum paid to the contractor.....' TDS would be levied.

in my opinion if any sum which has been credited or paid to the contractor TDS should be deducted even if the said amount does not form the part of income of the contractor.