Finance Act (2) of 2009 makes providing PAN details compulsory for certain eligible payments especially on account of freight. Failing which the deductor is expected to deduct TDS at a higher rate Being in logistic sector, the nature of business is such that we are dealing mostly with unorganised sectors where it is very difficult on our part to collect the PAN. Hence, the following is recommended.
PAN has to be synchronised with the Vehicle Registration Certificates. Hence a facility to be made available to pick the PAN details from the RTA site and hence the RTA to display the PAN details against each vehicle on their website.
PAN verification software has to be provided online on Income-tax website to check the correctness of PAN which is provided by the deductee to avoid additional tax liability on deductor.
Section 194 C (6) of the Income Tax Act has to be suitably modified to include all transportation of goods by Road including those transportation of goods by road which is covered under courier agency so far Service tax is considered.
In absence of clarity customer normally deduct TDS in case of Transport of Goods by road where it falls under Courier Agency Service category.
Also TAN verification software has to be provided online on Income-tax website to check the correctness of TAN provided by deductor which will be useful in 26 AS reconciliation.
Under rule 6 DD of the Income Tax Act, any cash payment in excess of Rs 20,000 is disallowed. However, this limit is extended up to Rs 35,000 in case of transporter. We recommend this limit to be increased to Rs 50,000 in case of transporter since the cost of input have drastically gone up on account of fuel, tyres and spare parts etc. The above limit was last revised in 2009.
Under depreciation the rate for commercial vehicle has to be increased to 60 per cent for purchase of new trucks against present rate of 30 per cent. Based on the nature of logistic industry and usage and useful life of the vehicles, it is recommended to accelerate the prescribed rate of depreciation to 60 per cent from the current prescribed rate of 30 per cent in case of trucks which are the basic assets for logistic industry. This is basically to compensate the high wear and tear of vehicles requiring replacement at a shorter duration.
As a part of green initiative and with the increased cost of fuel (petrol and diesel) a subsidy in form of tax benefit should be given to transport industries which use the vehicles driven by CNG/LPG. An allowance in terms of 100 per cent depreciation in the first year of usage of vehicle is recommended.
Sec 195 required tax compliance on foreign remittance and to read with the DTAA of respective countries. For logistic service and freight forwarders, in many cases it becomes difficult to get the documentation done before effecting the payment. Hence for logistic companies the freight payment which is largely on account of ocean/air freight should be exempted from requirement of Sec 195.
More clarity is required for classification under Courier & GTA from service tax point of view for logistic industries where the transportation of goods happens in goods carrier by Road. Rule 10 of Place of Provision of Service Rule 2012 should be suitably amended to include transportation of goods under courier mode also.
More clarity is required regarding the taxability (service tax) of ocean/air freight incurred in course of international freight forwarding.
Multiple registration: GST would required state wise registration and this would bring in a lot of compliance issues branch wise as competent personnel have to be placed. Hence we recommend in the case of logistic companies like in Service tax a centralised registration option to be explored and the sharing of tax from Central to state can be worked on the business of business generated state wise.
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