TDS Deduction from payments made to Non-Resident foreign shipping Companies

TDS Deduction from payments made to Non-Resident foreign shipping Companies:

 If the Payments are made to an agent of a Foreign(Non-Resident) Shipping Liner. Tds need not be deducted on the following category of expenses:

1. Ocean Freight
2. Terminal Handling Charges
3. Demurrage Charges
4. Any other amount of Similar Nature (Like Addl.Ocean Freight/Addl.Demurrage/Addl.THC etc )

 Any other expenses not mentioned above, will be subject to deduction of TDS.

 Documents required for non-deduction of TDS for the above expenses:

• Tax exemption Certificate issued by the Income tax Department. Name of the Principal (Foreign Shipping Liner) and Name of the Agent (Indian Agent of the Foreign Shipping Liner) should be mentioned in the Tax exemption Certificate. If the names of the Principal and Agent not mentioned in the Tax Exemption Certificate, Self Declaration Letter can be obtained from the Principal/Agent in the Letter Paper along with the Tax Exemption Certificate. This Certificate is valid only for the Period mentioned in the Certificate. Usually, the maximum period of the Certificate will be one year only. So we need to collect every year from the Party.
  

• Name of the Principal (Foreign Shipping Liner) and Name of the Agent (Indian Agent of the Foreign Shipping Liner) should be verified for each transactions with the relevant BL Copies.
  

Note:

 The above stated provisions will not applicable to any Indian shipping Liner.

 Reference:

• Sec.172 of the Income tax Act 1961 – Shipping business of Non-Resident
• Income tax Circular 723 dated 19.09.1995

Thanks & Regards,

A. Wilson