India: Withholding tax on payments, toll-collecting | KPMG | GLOBAL

India: Withholding tax on payments for highway toll-collecting services

India: Withholding tax on payments, toll-collecting

The Vishakhapatnam Bench of the Income-tax Appellate Tribunal held that tax must be withheld (deducted) from the amount of payment made to toll-collecting agencies under section 194C of the Income-tax Act, 1961.


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The taxpayer was engaged in the development and maintenance of highways across India, and availed the services of a toll-collecting agency for the collection of toll fees on these highways. The taxpayer withheld (deducted) tax in respect of payment for these services. 

The tribunal observed that the contract between the taxpayer and the toll-collecting agency was a mere contract for supplying labour for the execution of work contract and not a contract of agency. 


Read a June 2016 report [PDF 326 KB] prepared by the KPMG member firm in India: Payment to toll collecting agencies is liable for TDS under Section 194C and not under Section 194H of the Income-tax Act

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