Question And Answer
Subject: Import ocean freight paid to foreign shipping company is tds deducted
Querist: K. Umamahesh
Answered by:
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Date: April 4, 2024
Query asked by K. Umamahesh

Dear sir,

On Import of goods, we need to paid ocean freight and commission paid to foreign companies is liable to deduct Tds. Please clarify

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Answer given by

The Payment of ocean freight and IHC are not subjected to TDS by virtue of the provisions of Section 172. The CBDT vide Circular No.723 dated 19/09/1995 has clarified that a deduction of TDS was not required.

In the case of Pr. CIT vs. Bajaj Herbals (P.) Ltd. [2023] 148 147 (Guj)(HC) non-resident ship-owners or charterers, would step into the shoes of the principal, and hence, provision of s.172 would apply and not provision of s. 194C and 195.

Paid export freight to a shipping agent of non-resident ship owner or charter without deduction of tax at source, provisions of s.172 would be applicable in the instant case and provisions of s.194C or s.195 which provide for deduction of tax at source shall not be applicable. Pr. CIT vs. Summit India Water Treatment and Services Ltd. [2020] 271 Taxman 69 (Guj)(HC)

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