TDS filing for payments to transporters

Posted In | Finance | Accounting Software | India Accounting Tax

Tax Deducted at Source (TDS) is one of the modes of collecting income tax from the taxpayers in India. It is governed under the Indian Income Tax Act of 1961. Businesses and individuals making payments to contractors, professionals, or carrying out business with manufacturing companies need to deduct TDS at the time of crediting certain specific nature of the payment to the payee's account.

 

Understanding TDS on Transporter

Under Section 194C of the Income Tax Act, TDS is deducted for payments made to the transporter. If the transporter does not provide their PAN, then TDS is deducted at the rate of 20%. However, if the transporter provides their PAN, then no TDS is deducted. This exemption is provided under Section 194C (6) of the Income Tax Act.

 

Procedure for TDS Filing for Payments to Transporters

The process of TDS filing for payments to transporters involves a few steps. Firstly, the payer needs to deduct the TDS at the time of making the payment. The TDS deducted is then to be deposited to the government by the 7th of the next month.
 

The payer should then file TDS return in Form 26Q by the end of the next month. If the transporter has provided their PAN, then while filing the TDS return, the payer should select 'C - Lower Deduction' in the 'Reason for non-deduction/ lower deduction' column in the challan details.

 

The TDS mechanism is a significant aspect of the income tax structure in India, aiming at minimizing tax evasion. It is crucial for businesses and individuals to understand the TDS provisions and comply with them to avoid penalties. Remember, when it comes to tax, prevention is indeed better than cure.