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

AI Summary

TDS classification of Custom House Agents: determines whether withholding follows contract service rules or professional service obligations.
A dispute concerns whether fees paid to Custom House Agents should be treated under TDS classification as contractual services or as professional/technical services, given CHA activities like cargo clearance, freight, warehousing, transportation and inspection. Forum responses diverge: some practitioners treat CHAs as contractors attracting contract withholding; others report auditors or revenue authorities treating certain CHA receipts as technical/professional services. A proposed professional-regulation measure could change classification, and payers withholding under the professional treatment should provide written justification.