TDS on Transporter w.e.f 01.06.2015


TDS ON TRANSPORTER

Earlier Provision

 The earlier provision (upto May 31, 2015) provides that no deduction of tax is required from
payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his PAN to the payer.

 New Provision effective June 1, 2015

 The new provision of Section 194C, as was informed earlier at the time of the Union Budget,
restricts the cases for non-deduction of tax. Non deduction of tax will be available only for small transport operators owning not more than 10 goods carriages.

 Analysis:

 If transporter is not owning more than 10 goods carriage at any time during the previous year, then we, as payers (Tax deductor’s) have to obtain a declaration from transporter along with his copy of PAN before credit or payment to transporter, whichever is earlier.
If the transporter is owning more than 10 goods carriage at any time during the year, then we, as payers are liable to deduct TDS at the time of paying charges to goods transporter at the rate of 1% or 2% as the case may be; based on the transport contractor’s status which can be identified from the 4th alphabet of the PAN. 

 Conclusion:

 Effective June 1, 2015 TDS will be applicable at the rate of 1% or 2%, as the case may be, in the case of all payments made to a contractor during the course of plying, hiring or leasing of goods carriage, except in cases where such contractor has furnished a Declaration.
The tax deduction will be required to be done at the time of credit of the amount payable to
the account of the contractor (or to any other account) or at the time of payment, whichever is earlier.

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