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Transport charges included in invoice - 194C or not?

06 February 2024

Hi everybody, it would be very helpful if you could answer my query.

So the assessee purchases goods for which an invoice is raised. In the invoice transport charges are also included which are greater than Rs. 30,000. My question is do we have to deduct TDS for transport charges which are included in the invoice. 194Q does not apply to the assessee.

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5 Replies

Saravanan nagaraj (463 Points)
Replied 06 February 2024

Threshold Limit for deduction of TDS on payment made towards Transportation Charges under Section 194C of the Income Tax Act, 1961

No deduction of TDS on Transportation Charges in case of payment of Rs. 30,000 in a single transaction or payment of aggregate amounts not exceeding Rs. 1,00,000.

If it exceeds the threshold limit, then the rate of deduction as provided under Section 194C of the Act will be applicable, i.e., 1% or 2%
As you mentioned TDS sec.194Q, it is for buyer who made purchase exceed 50 lakhs. But, you collect charge from your buyer for the transportation expenses. You should deduct this TDS against your transporter not buyer. 194Q is not applicable. 194C is correct.

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sabyasachi mukherjee (27574 Points)
Replied 07 February 2024

Applicability is important

Prateek Jain (4 Points)
Replied 07 February 2024

No, the seller has raised an invoice for the goods sold by him and also included transportation charges in the same invoice. The invoice for transportation charges is not raised by the transporter. What would be the TDS applicability in this case?

Saravanan nagaraj (463 Points)
Replied 07 February 2024

It is an universal concept to raise sale invoice by seller. No one disagree with you.

Please ask this question yourself.

You are seller right.

Do you have a own transport facilities like cargo or shipping?

Does your buyer has this facilities?

Who does this transportation on behalf you?

When you despatch your material through someone vehicle or through transport companies. They will give a transport invoice. If Transporter register his business under GST, he will give you an invoice in RCM.

When you make payment to your Transporter. You should deducted TDS against payment. It fall under under 194C. Not with buyer.

Your buyer paid transport expenses against your invoice. Who provide transport service? You should TDS from them. Okay. Please let me know your thoughts. 🙏 Thanks

CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 10 February 2024

The regulations specified in Section 194C exclusively apply to work or labour contracts. This section is not applicable to a contract that agrees on the sale of any goods or the sole/exclusive supply of goods or products.

TDS deduction u/s 194C is applicable only when the following conditions are met:

Payment to the contractor must be executed by an individual or entity as specified in Section 194C

Payment must adhere to the terms in the agreed contract between the payer and contractor

Contracts formed in a verbal or written form

Payment must not exceed the ₹30,000 limit at any given time

Payments surpassing ₹75,000 in a fiscal year are liable for taxable fee deduction by the payer

Advance payments of over ₹30,000 are also liable for TDS deduction by the payer

Additionally, if cumulative payments to the contractor, initially below ₹30,000, later exceed this threshold, TDS is liable. Here, the payer must deduct TDS from the total amount, including the previous payments.