Section 194C TDS for Transporters: Rates, Exemption & 10-Truck Declaration
Key Takeaways & Executive Summary
Under Section 194C of the Indian Income Tax Act 1961, any entity paying freight to a transport contractor must deduct TDS (1% for individuals/HUF, 2% for companies) if a single payment exceeds ₹30,000 or annual aggregate exceeds ₹1,00,000. However, sub-section (6) provides complete exemption for contractors owning 10 or fewer trucks.
1. Applicable TDS Rates under Section 194C
• Transporter is Individual / Proprietorship / HUF: 1% TDS.
• Transporter is Company / Partnership / LLP: 2% TDS.
• Transporter does not furnish valid PAN: 20% TDS under Section 206AA.
2. The 10-Truck Exemption Declaration under Section 194C(6)
No TDS shall be deducted from payments to a transport contractor who owns 10 or fewer goods carriages at any time during the financial year, provided they submit a signed declaration with their PAN to the payer.
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Frequently Asked Questions
How does a transporter reconcile deducted TDS?
Reconcile deducted TDS against Form 26AS on the Income Tax portal and claim credit or refund while filing the annual ITR.
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