Tuesday, June 2, 2015

TDS from payment to transporters and declaration for non deduction of tax at source wef 01.06.2015

The Finance Act, 2015 has made certain amendments in the provisions of 194C for deduction of tax at source from payment to transporters. Presently, section 194C of the Act provides for TDS @1% if payment is made to an Individual or HUF and @ 2% in case of any other payee from contractual payment if exceeds Rs.3000/- or Rs.75000/- in aggregate in one Financial year but exempts payments made to contractors during the course of plying, hiring and leasing goods carriage if the contractor furnishes his PAN.

There is amendment with effect from 01.06.2015 which provides NO TDS in case where such transporter owns ten or less goods carriages at any time during the previous year and furnishes a declaration to such effect, along with PAN.

Prior to 1.10.2009 there was no TDS from payment to Individual transporter having two or less goods carriage at any time during the previous year but wef 01.10.2009 there was an amendment which provided Non- deduction of Tax from payments made to the transporters ( i.e Contractor running business of hiring and leasing goods carriage ) if such transporters furnishes his PAN to the payer. As a result all transporters large and small are claiming exemption from TDS but to restrict this exemption to small transporters only now from 01.06.2015 amendment has been made in Section 194C(6) to provide that:
No Deduction of tax shall be made from any sum credited or paid during the previous year to a contractor doing business of plying, hiring or leasing goods carriage if-
-   Such transporter owns 10 or less goods carriages at any time during the previous year, and
-  Furnishes a declaration to that effect along with his Permanent Account Number to the person responsible for making payment or crediting such sum.

Since this amendment is applicable from 01.06.2015 the person responsible for making payment from any company or firm or individual subject to tax dealing with transporters as individual, firm or company are advised to circulate among vendors the requirement of getting the following for Non deduction of Tax from any sum paid or credited to such contractor who is running business of hiring and running of goods carriage:
-      Self attested copy of PAN Card
-     Declaration of the fact that such contractor is neither registered nor beneficial owner of more than 10 goods carriages.

 Specimen of Declaration:
On the letter head of the Transporter
Declaration of the Transporter in case of Non-deduction of Tax

1.     I, Kalpana Singh Son of Sh A            Singh R/O                                                         Delhi am a sole proprietor / partner/ director of  ABC Transport...... having PAN No.                      .

2.      I / we  am/are engaged in the business of plying, hiring or leasing of goods carriage in the name & style of ABC Transport having registered office at ------------------------------Transport Nagar,                                   Delhi.

3.      I /we do not own more than ten goods carriage whether in my/our Trade name or in my/our name as on date. The Detail of heavy Goods Carriages/ Trucks owned by us is as under:
      i) Vehicle No.1 bearing RC number --------------- and date of registration
     ii) Vehicle No.2
     iii) Vehicle No.3
     iv) Vehicle No.4 .......
4.      I/we undertake to intimate you in writing in case the number of goods carriages owned by me/us whether registered or otherwise in my/ our name or in my/our trade name exceeds ten or any new addition or sale at any time during the Financial Year 2015 -2016

5. I / we are submitting this undertaking for non- deduction of tax at source under Section 194(6) of the Income Tax Act,1961 with a request for payment/ credit of transportation charges without deduction of TDS with an intimation to Income Tax department by you in Form 26Q as prescribed.

6. I undertake to indemnify you for any costs, taxes, expenses or any liability arising upon you due to any default in this regard for wrong declaration or delay in filing such declaration.


I, Kalpana Singh Son of Sh A                 Singh PAN No.                  do hereby make the above declaration as required under sub-section (6) of Section 194C of Income Tax Act 1961 for receiving payments from your company without deduction of tax at source (TDS).  The facts given in the Declaration are true and correct to the best of my knowledge and belief and no part of it is false and nothing material fact has been concealed.

( Kalpana Singh )

Date: 01/06/2015