CASE STUDY ON REIMBURSEMENT OF EXPENSES MADE TO C&F AGENTS

Assessee engaged in the business of imports and/or exports, engages services of Clearing & Forwarding agents.

Payments to such C&F agents comprise of the following:

·         Reimbursement of freight paid to shipping companies or airlines.

·         Reimbursement of freight on local transportation

·       Reimbursement of import or export clearing expenses like payments to Port Trust, Airport Authorities of India, miscellaneous charges, etc.

·         Reimbursement of bonded warehousing charges.

·         Reimbursement of Customs duties and Octroi.

·         Reimbursement for Crane and Machinery charges to Port Trust etc.

·         Agency service charges

Whether any tax is liable to be deducted on any of the above payments to C&F agents?

Query

If the agent has already deducted TDS on freight payments to the Indian Shipping Co., then whether the importer/exporter also needs to deduct tax on the payments made to the agents and if so then on what amount?

When C&F agent deduct tax and pays it to the ex-chequer, the payments would be on his own TDS account or his clients’ account number?

Held

 If the assessee reimbursed expenses towards freight incurred on its behalf under an agreement for which separate bills is raised, the provisions of section 194C are not attracted

• Section 194C is applicable where payments is made to a contractor / sub- contractor where the contract is either a work contract or a contract for supply of labour for works contract

• In the present case, the assessee has reimbursed the expenses to its consignment agent and it was not a direct payment of freight by the assessee to the transporter Surendra Commercial & Exim. Know More about information: TDS Consultants and International transfer pricing

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