Tds on reimbursement of expenses

[d.v. gupta]

dear sir, we CHA making payment for freight to the non resident companies having no office in india. the non resident co. paid freight for our client and raise bill to us. we recovered the bill amount from client in india and make te freight payment incurred on our behalf to non resident co..kindly advise whether we should deduct tax at source under income tax. if yes, at what percentage

[Mukesh Kumar]

Though the CHA is making the payment to GTA on behalf of his client who is non resident but the same qualifies the terms of section 194C which opens as "Any person responsible for paying any sum to any resident...." Therefore, as per the provisions of section 194C you need to deduct TDS under as payment to contractors at the rate of 2%.

AI Summary

TDS on contractor payments: CHAs must withhold tax when paying or reimbursing freight charges to service providers on clients' behalf. Payments made by a customs house agent to freight service providers on behalf of a client are treated as contractor payments for TDS purposes; the CHA, as the person responsible for making the payment, must deduct tax at source when reimbursing or paying freight charges to the service provider, even if the carrier is nonresident.