TDS on Custom House Agent

[Andrew Antonio Fernandez]

Dear All,

We are a Licenced Custom House Agent billing our clients for services rendered (Clearance of Import cargo through customs and sdespatching to client). A new client is deducting TDS under 194J @ 10% whereas all our other clients are deducting TDS under 194C @ 2%. On enquiring, they say that their auditors have advised them to deduct and have asked us for the rule of Income Tax wherein it is mentioned that CHA's come under contractors ie:194C. Please advise.

 

Regards,

Antonio

[SANJIV KOTHARI]

TDS is deductible under section 194C only. C&F agent act as a link between the manufacturer and the consumer. He act as a contractor and execute work on behalf of manufacturer/exporter. Ask your client to give reason in writing for deducting u/s 194J.

[KR Ramesh]

Dear Antonio

We are also presently having the enquriy u/s 201, upon Scruitiny of accounts the tax officer has raised the query why tds on CHA has been deducted @2% as this should fall under section 194J. He said the CHA on behalf of client do the following service mainly freight charges, warehouse charges, survey charges, transportation cost , inspection charges etc. He says these service come under the category of technical service thereforre section 194J would be applicable.

Regards

Ramesh

[Guest]

u/s 194J is applicable to technical and proffessional who are qualified as to their proffessional services,pls note that CHA is not yet classified under this catagory but,this is going to be done soon maybe by october 2012,once this catagory is listed under proffessional then 194J  will apply

you can get details from "legal practitiomers[regulations and maintanance of standards in professions.protecting the interest of cliants and promoting the rule of law],act 2010

this act is under discussion for establishment of legal services board this act has proposd to include customs clearing agents as legal proffessionals u/s that once this act is enacted CHA service will be 194J till then it is contract and subcontract as every cliant enters a contract for the duties and value of the service a difference can be drawn between legal proffessionals who deal with the DIRECT TAX LAWS AND LEGAL ENFORSMENT LAWS

reg sushil gupta

[Guest]

This confusion really has been triggered mainly for two kinds of classifications for the service in vogue with man customers. These are -

Some firms treat the C H A  as "Consultants" and some as Professionals under this 10 % TDS (194 J) is being deducted. Whereas these firms should rightly be classiefied under 194 C only as they are not doing any professional services offering consultancy or expert opinion but clear the consignments by submitting required papers collected from the importeres/exporteres and see that these files are moved from one table to another table. In all most all cases they are serving as only conduit for bribes.

Regards

Rajuramachandran

AI Summary

Debate Over Correct TDS Rate for Custom House Agents: Contractor vs. Consultant Classification Under Sections 194C and 194J A Licensed Custom House Agent (CHA) raised a query about discrepancies in tax deduction at source (TDS) rates by clients. While most clients deduct TDS under section 194C at 2%, a new client applies section 194J at 10%, citing auditor advice. Responses indicate that CHAs should fall under section 194C as contractors, but some argue that services like freight and inspection might qualify as technical services under section 194J. There is ongoing debate about classifying CHAs as professionals, which could change TDS applicability. The confusion arises from differing interpretations of CHAs' roles as contractors versus consultants.