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

CHAs must deduct 2% TDS on freight payments to non-resident companies under Section 194C of the Income Tax Act. A customs house agent (CHA) inquired about the requirement to deduct tax at source (TDS) when paying freight charges to non-resident companies that have no office in India. The CHA recovers these charges from clients in India. In response, it was clarified that under Section 194C of the Income Tax Act, TDS should be deducted at a rate of 2% as the payment is made to contractors, even though the payment is on behalf of a non-resident client.