TDS on demurrage paid to overseas supplier, Income Tax

[Shyam Naik]

Dear Experts,

We are coal importers. The contract with the supplier provides that the Coal shall be supplied on CIF basis. Accordingly, the sea freight is paid by the foreign supplier.

The contract provides for a time, within which, we are required to discharge the cargo. In case the discharge gets completed before the time allowed, we are eligible for some refund. Similarly, in case there is delay, we are liable to pay an agreed amount to the seller. This amount is referred to as demurrage.

Whether, the amount of demurrage payable to overseas supplier is liable for deduct of TDS u/s 195.

Kindly opine.

Thank you.

With due regards,

Shyam

Posts / Replies

[Ganeshan Kalyani]

In my view No, but i welcome views of colleague experts. Thanks.

[MARIAPPAN GOVINDARAJAN]

In my view TDS is recoverable. I came across some case laws in this regard.