TDS on Clearing & Forwarding Agents Payment
If anyone has any kind of Doubt Regarding TDS on Agency Service Charges (Charges of CHA Agents like Prime Forwarders, Unique Speditorer Pvt. Ltd. For Import or Exports) is fall within one type of Commission and It should be deduced tax u/s 194H & not 194C then here is the clarification.
Section 194H “Commission or Brokerage” specifies that
- any payment received or receivable, directly or indirectly by a person acting on behalf of another person for service rendered (not being professional services)
- for any services in the course of buying or selling of goods
- in relation to any transactions relating to any assets, valuable article or things, other than securities
But we pay to Clearing and Forwarding Agent for Carriage of Goods and not Commission for Buying or Selling of goods. Carriage of Goods means One type of Release Goods from Custom Authority and Sent to the Goods at Our Premises So Question of Commission or Brokerage cannot be raised thus Section 194H may not be applicable.
Related Topic:
Section 194C – TDS on payment to contractor or subcontractor
As per Circular No. 715 Dated 08-08-1995, Any Payments Made to Clearing and Forwarding Agents for Carriage of Goods shall be subjected to deduction of tax at source under Section 194C
Section 194J – TDS on Fees for Professional or Technical Services
The activities carried out by Clearing and Forwarding Agent (C&F Agent) form one Composite “Work”, and Any Payments to such agents will attract deduction of tax at source only under section 194C of the Act. It was held that such payments could not be treated as fees for professional or technical services and subjected to tax deduction at source under section 194J, since the nature of the services were in pari materia with the nature of services as contemplated in section 194C – Glaxo Smithkline Consumer Healthcare Ltd. Vs. ITO (2007) 12 SOT 221 (Delhi – Trib.)
Related Topic:
Section 194I – TDS on Rent under income Tax
| Glaxo Smithkline Consumer Healthcare Ltd. v. ITO |
| Month-Year : | Jul – 2007 |
| Author/s : | (2007) 12 SOT 221 (Delhi) [BCAJ] |
| Title : | Glaxo Smithkline Consumer Healthcare Ltd. v. ITO |
| Details : |
| For the relevant assessment years, the Assessing Officer held that services rendered by clearing & forwarding agents were in the nature of managerial services and, therefore, tax should have been deducted on such payment u/s.194J. The Assessing Officer, thus, held the assessee as an assessee in default, u/s.201(1)/u/s.201(1A) for short deduction of tax. On appeal, the CIT(A) confirmed the impugned order.
The Tribunal held that the tax was to be deducted u/s.194C and not u/s.194J. The Tribunal noted as under : (1) As per the nature of services rendered, the same was in pari materia to the services as contemplated u/s.194C, and the same was not for any professional or technical services as mentioned u/s.194J. (2) It is clear from the provisions of S. 194J that services of the agents are neither professional services nor technical services. Such services are also clearly not in the nature of technical consultancy or managerial services. Therefore, tax in respect of these services is not deductible u/s.194J. (3) The CBDT, in its Circular No. 720, dated 30-8-1995, had also provided that various provisions of Chapter XVII relating to deduction of tax at source are mutually exclusive and that Chapter XVII deals with a particular kind of payment to the exclusion of all other Sections in this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one Section. Therefore, payment is also liable for tax deduction only under one Section as warranted by the nature of services stipulated therein. (4) Since, in the instant case, payment made by the assessee to the agent was for the services which were predominantly for ‘carrying out work’, inter alia, relating to storage, dispatch, transportation, loading and unloading of goods, etc., the assessee had rightly deducted tax at source u/s.194C. |
Related Topic:
Section 194J – TDS on Professional or Technical Fees
Section 194I – TDS on Rent
The activities carried out by a Clearing and Forwarding Agent form one composite “work”, and hence payments to such an agent will attract deduction of tax at source only under section 194C of the Act, The mere fact that an element of storage is involved in the activities cannot be the basis to treat any portion of the payment as “rent” and to direct deduction of tax at source under section 194I. The words “any other agreement or arrangement” in the definition of “rent” have to be read ejusdem generis with the preceding expressions, viz., lease, sub lease or tenancy. If so read, even the other agreement or arrangement should also be of the same nature as that of lease, sub lease or tenancy. It could not also be said that the dominant purpose of the agreement in the case of a clearing and forwarding agent is only warehousing – Eli Lilly & Co. (India) (P.) Ltd. Vs. Deputy CIT (2006) 99 TTJ (Delhi – Trib.) 461. Payment made to C&F Agents would be covered under section 194C, and cannot be brought under section 194I merely because the agent temporarily stored the goods during the inevitable time-gap between the receipt of goods and their onward despatch – National Panasonic India (P.) Ltd Vs Dy. CIT (2005) 3 SOT 16 (Delhi – Trib.)
Related Topic:
GST: Guide on Reimbursement and Disbursement of Expenses
Best Regards
CA Sukrit Udani & CA Ankur Mehta
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