Purna623
Chartered Accounant
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one of my company providing services to clients.they imposed service tax on this services and finally they sent cheque by deducting TDS on services and also deducting tds on service tax.
Is it correct to deduct tds on service tax also? is ther any exemption to deduct tds on service tax
any circulars r clarifications for it
pls give me reply verification of proper provisions under tds guidelines etc

Hi,
The law says that T.D.S. has to be deducted on the "amount paid or credited" to the account of the payee. Wheather the payment is towards service tax or services is not distingused by Incmoetax act. The point raised is very valid and has been debated on many platforms. But the suitation is that same that TDS has to be deducted on service tax also.:-|.
Well there is a deviation with respect to rent received on which the t.d.s. need not be deducted on serivce tax amount which was exepmted via. a circular issue by CBDT somewhere in April'08.
Regards,
Vikas Goel

vikash is correct, so far as Service tax on rent is concerned, there is clear notification that TDS wont be deducted on Service Tax. for others, it is debatable and if the party insists not to deduct TDS on service tax and one does not deduct TDS, it will be in compliance and NO ITO will ask any question. TDS is deducted on payment which is income in the hands of the receipient, receipient collects the service tax and deposit the same with gov, how can it be established as income, hence no question of deduction of TDS on service Tax. however, it is still required clarification from CBDT.
no, TDS does not apply to service tax.
Letís take a look at a little longer answer to understand how TDS is to be deducted on a bill when service tax is to be paid. Letís suppose you employed someoneís services and you have to make a payment of Rs 50,000 for the same. Since the payment is above the threshold limit of Rs 30,000 per bill, TDS needs to be deducted on it. But the service provider has charged 14% service tax and 0.5% Swachh Bharat Cess, so the billed amount has come to Rs 57,250.
In such a case, the bill would be broken down as:
Service Fee 50,000
Service Tax 7,000
Swachh Bharat Cess 250
Total 57,250
Now, do you deduct TDS on Rs 50,000 or Rs 57,250 before making the payment?
TDS would be applicable only on Rs 50,000. That is, only on the actual income of the service provider. The service tax is tax that the provider will pay to the government. Hence, it is not the providerís income. And TDS is tax that is deducted at source on income.

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