Question ID :
TDS on Payment to Custom House Agents (CHA) or Clearing & Forwarding (C&F) Agents
Q;The Company has one shipment from X Pvt Ltd , they raised invoice in the name of Importer Y Ltd and CHA (Z Ltd) has made the payments after deducting the TDS on behalf of Y Ltd. But X Ltd is not accepting the payment because of CHA has deducted the TDS.
According to Income Tax Act 1961,
1. Normally, Custom House Agents (CHA) or Clearing & Forwarding (C&F) Agents operate on a contractual basis and so the tax is deductible u/s 194C of the Income Tax Act 1961.
2. Section 194C (1) provides that any person responsible for paying any sum to any resident contractor, for carrying out any work in pursuance of a contract, shall deduct tax at source at a specified percentage.
3. Custom House Agents (CHA) or Clearing & Forwarding (C&F) Agents make payments on behalf of the importers and exporters towards statutory levies, for example,dues, customs duties, etc., and other reimbursable expenses like Container charges, ICD Charges, stamp charges, and processing other statutory charges.
when the payment is Subject to TDS according to the provisions of IT Act 1961, making the payment through an agent does not alter TDS liability. Therefore we are liable to deduct TDS while making payment to Shipping line
Still X Ltd are refusing to accept payment with TDS Deduction. They are saying that Third payment is always consider as reimbursement of expenses which is not liable for deduction of any tax at source so please don’t deduct our tds .
Give your valuable suggestions regarding the above matter
GOPAL KUMAR AGRAWAL
Nov 16, 2019