Transporter’s Declaration for Non–Deduction of TDS u/s 194C (Drafting)

From Plain Reading of Section 194C(6) one would draw a conclusion that if the transporter owns more than 10 vehicles on the date of the transaction and subsequently sells some vehicles such that number of owned vehicles is less than 10 and gives a declaration to this effect and then there is no need to deduct TDS even if during the same year the number of vehicles exceeds 10 subsequently. Further, even if any transporter owns zero vehicles i.e. he hires the vehicle from third party for the purpose contract he will get the benefit of the section because zero is also less than 10 even though this is not the intent of the statute.

The real intention of the Law maker is explained vide circular no. 19/2015 dated 27.11.2015 issued by the Central Board of Direct Taxes.

Para 43.5 of the circular reads as follows

“The condition of not owning more than ten goods carriages by the transporter is required to be fulfilled on the date on which the amount is credited or paid, whichever is earlier. In case a transporter does not own ten goods carriages on the date on which the amount is credited or paid but becomes owner of ten goods carriages later in the previous year, the payer shall not be required to deduct tax from the payment made to the transporter during the period of the previous year when he was not owning more than ten goods carriages. However, the tax shall be required to be deducted from the payment made during that part of the previous year during which the transporter owned more than ten goods carriages.”

Para 43.4 of the Circular reads as follows

“Further, this exemption from TDS is applicable only in respect of transport charges received for plying, hiring or leasing of goods carriage (s) owned by the transporter. Therefore, if a person receives payment in respect of plying, hiring or leasing of goods carriage (s) which are not owned by him, he shall not be entitled to claim exemption from TDS in respect of these payments.”