| Question And Answer | |
|---|---|
| Subject: | When a transporter having more than 100 Cr of Turnover purchases Diesel from Indian Oil Corporation Ltd and receives Petro Cards of the same amount is he liable to deduct tax at source u/s 194Q of the Act ? |
| Category: | Income-Tax |
| Querist: | P.N.Shangari |
| Answered by: | Research Team |
| Tags: | Petro Cards, Tax deduction at source, TDS U/S 194Q |
| Date: | June 7, 2021 |
A transporter having more than 100 Cr of Turnover purchases Diesel from Indian Oil Corporation Ltd.It makes advance payments to the Co and in return receives Petro Cards of the same amount.The no. of Petro Cards and value charged to each card is as per the requirement of the transporter. The driver of the individual truck is buying diesel from any dealer of the IOC located on his allotted route by swiping the Petro Card on the POS machine kept at the pump.The pump owner hands over a machine generated slip of the quantity of diesel filled and amount thereof.
In this scenario how the transporter shall comply with provisions of section 194Q?
When and on which amount shall it deduct TDS?
One has to study the term of contract when a card is purchased and the bill issued by Indian Oil Corporation Ltd . The threshold limit would apply in case of every vendor separately . Vendor includes all its branches. Aggregate value of al goods purchased from single vendor should be considered for the purpose of threshold limit and tax deduction . CBDT vide circular no 17 dated 29 -9 2020 dealing with section 206
(1H) has clarified that transactions between manufacturers and dealers / distributors would apply applying the same logic section 194Q would be applicable transactions between manufactures and dealers and distributors .It seems each dealer is a separate legal entity and they are not branch of Indian Oil Corporation , hence purchase from each dealer is to be considered a separate contract , in case value of purchase from each dealer does not exceed Rs 50 lakhs the assessee may not be liable to deduct the tax at source . The tax consultant may be in a better position to explain the provision by studying the contract entered between the assessee and Indian Oil Corporation Ltd .
WHAT IF THE TRANSACTION BETWEEN THE ASSESSEE AND DEALER CROSSES THE LIMIT?, IF YES THEN ON WHOM TDS TO BE DEDUCTED BY THE ASSESSEE. PLEASE SUGGEST ME IN THIS REGARD.