TDS Rate cut by 25 percent for Transports – Payment to Contractors under Section 194C

Carriage of goods and passengers by any mode other than railways is liable to TDS deduction under section 194C. As finance minister Nirmala Sitharaman today announced the package to fight against adverse situation, aimed at all sections of the society, including the middle-class, SMEs, we will describe here the implications on Transport and Goods Carrier.

From 14th May, 2020 onwards till 31st March, 2021 the TDS and TCS rates are reduced by 25%, The TDS reduction will infuse liquidity of ₹50,000 crore Finance Minister said.

Rate of Tax under Section 194C for Goods Transporters

• 1%(now 0.75%), if payment is made to an Individual or HUF
• 2%(now 1.5%), if payment is made to any other person

The tax shall be deducted at these rates without including the surcharge, education cess and secondary and higher education cess. However, if PAN of recipient is not available, then tax shall be deducted at the rate of 20%(now 15%) in accordance with the provisions of Section 206AA

When is TDS under Section 194C not applicable?
Tax is not required to be deducted in the following cases:

• If amount is payable to a person who is engaged in business of plying , hiring or leasing goods carriages and he does not owns more than 10 goods carriage vehicle’s, during the financial year. Such exemption is provided only if the recipient furnishes his PAN and payer intimate’s the details to IT Dept. in TDS Return.
• If amount paid or credited does not exceed Rs. 30,000 in a single payment and Rs. 1,00,000 in aggregate during the financial year.

There is nothing our clients have to do, We will update the rates of TDS in Fleetable Operations from 14th May, 2020 onwards.

Source – Taxman