TDS on payment made to Transporters

Introduction to Section 194C

 

As per Section 194C of the Income Tax Act, 1961 any payment to a transporter is subject to a Tax Deduction at Source (TDS) at the rate of:

 

1% in case if the payee is an Individual or a HUF, and

 

2% in case of other payees

 

In case, if such payment exceeds Rs. 30,000 per contract or aggregate of such payments of contracts in a financial year exceeds Rs. 100,000.

 

TDS on transporters for plying, hiring and leasing goods carriage

 

Old Provision (till May 31, 2015)

The earlier provision provides that no TDS be deducted from payments made to the transporters if the transporter furnishes his PAN to the payer.

 

New Provision with effect from June 1, 2015

The new provision of Section 194C limits the above cases for non-deduction of tax. Non-deduction of tax will be applicable only for small transport operators owning not more than 10 goods carriages for the financial year.

 

Process identified

If the transporter is doesn’t own > 10 goods carriage at any time during the financial year, then deductor has to obtain a declaration from transporter along with the copy of a PAN before credit or payment to the transporter, whichever is earlier.

 

The transporter is liable for TDS if  > 10 goods carriage is owned at any time during the year. The TDS has to be deduction at the time of paying charges to goods transporter. TDS will be deducted at the rate of 1% or 2% as per the status of Transporter.

 

Conclusion

With this amendment to the Act, reporting all deductions w.r.t Nil TDS on transporter payment in quarterly return (26Q) is made compulsory.

 

The person responsible for making the payment to the transporters, which is subject to tax, must collect following documents for such transactions:

 

Self-attested copy of PAN Card

Declaration of the fact that such contractor is neither registered nor the owner of more than 10 goods carriages.

Why business organizations incorporate a company in Singapore?

Forbes’ Best Countries for Business rankings, Singapore ranks at Rank 9, vis-à-vis India ranks at number 63.

Singapore is considered as world’s second best after New Zealand, when it comes to ease of doing business ranking by World Bank for year 2018. India positions at rank 100.

Singapore is, in fact, is considered the most friendly business environment for promoters. Let’s look at comparative business advantages if one does business in Singapore or India.

Income Tax

At India, the tax highest tax slab is 30% excluding 15% surcharge and other cesses, while at Singapore it is 22%

Tax on dividend

At India, dividend distribution tax is charged at 15%, while there is no dividend distribution tax at Singapore.

Income tax for companies

At India, a flat rate of 25% plus applicable surcharge is charged for small companies and 30% for plus applicable surcharge on bigger ones. In comparison, Singapore charges 17% corporate tax to companies.

Tax exemption for new companies

While there are stringent conditions to be met at India for claiming any tax advantage in initial years, Singapore gives full tax exemption on the first $ 100,000 chargeable income in first 3 years.

Conclusion

In the times of globalization, zero country borders, instant communication, every business wants to expand its wings across the globe. Singapore does offer a very good environment for your global needs.

Checks for SEIS/MEIS application for maximum advantage

How to decide, when you should file an application for grant of incentives under the SEIS scheme of DGFT. You need to make sure that the Invoices raised by you during the year has been remitted to your account by your client to avail the benefits to the fullest. One can file the application for FY 2018-19 by 31st March 2020 to avail the reward without imposing any cut.

Last year by mid term review of FTP, the benefits were increased by 2% effective 1st November 2017. In case your last year incentives are yet to be availed, divide your application under two parts for different percentages of benefit availment. The validity of duty credit scrips was also raised from 18 months to 24 months for SEIS.

Effective 6th October 2017, the rate of GST on duty scrips was made NIL. The duty credits scrips were made transferable long back.

E Com Module for SEIS activated for FY 2018-19

The E-com module for SEIS #application for the period-2018-19 has been released by DGFT on 01.05.2019. One can now file the application for claiming #service #export #benefit for the said #financialyear.
Do make sure that the payments from Debtors as on 31.03.2019 has been realized to avail the benefit at the fullest.