TDS is applicable for Warehouse Cargo Insurance Charges or not

[MUTHUKUMARAN K]

We got private bonded warehouse tax invoice with collect Storage Charges and Warehouse Insurance Charges in single invoice. TDS percentage is what ? and TDS deduct both charges ot not?

with regards

K.Muthu Kumaran

[Sadanand Bulbule]

It is already answered at issue ID No. 120313.

[Johnson Jame]

Hi,

For your query:

1. TDS on Warehouse Storage Charges: Yes, TDS is applicable under Section 194C (payment to contractors) if the payment is made to a contractor for warehousing services. The applicable TDS rate is 2% (for companies) and 1% (for individuals/HUFs), provided the invoice value exceeds the threshold limit.

2. TDS on Insurance Charges: Generally, if the insurance premium is collected and paid to an insurance company, TDS is not applicable on the insurance portion. However, if it is being charged as part of a composite service (not directly paid to an insurance company), then tax authorities may consider TDS applicability under Section 194C.

3. Single Invoice (Combined Charges): If both storage and insurance charges are billed in a single invoice and are not bifurcated, its safer to deduct TDS on the entire invoice amount to avoid disputes. Ideally, you should request a break-up of the invoice for clarity.

It’s advisable to take a professional opinion from a tax consultant for documentation purposes.

AI Summary

TDS on warehousing services may apply and, if storage and insurance are combined, deduction on full invoice may be prudent. Storage services supplied by a warehouse are subject to withholding under Section 194C as contractual payments when made to a contractor, with standard withholding rates applying subject to the threshold. Insurance premiums paid directly to an insurer are ordinarily not withheld, but if insurance is charged as part of a composite supply by the warehouse operator and not remitted separately, withholding may be treated as applicable. If a single undivided invoice is presented, withholding on the entire invoice is a pragmatic compliance response unless an itemised breakup is produced.