TDS and Service Tax

This query is : Resolved

CA Parag Jani (Querist)
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06 December 2010 Dear all

If an assessee subjected to tax audit u/s 44AB, pays any sum to the transporter of goods being traded by him, then he’s covered under the TDS net u/s 194C. But my question is – Is the assessee covered under service tax net? In case of goods transport agency, the recipient of service has to pay the service tax on freight amount. In this case, the transporter issues invoices for freight WITHOUT Service Tax? So what should be done on assessee’s part? Should he deduct TDS only or should he deduct TDS as well as Deposit the Service tax to the credit of govt.? And on what amount should TDS be deducted?

Plz advise

CA Anisha Ray

CA Anisha Ray (Expert)
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07 December 2010 Suppose the transporter has raised a bill for Rs. 25,000/- without service tax. Then you are supposed to deduct TDS @2% in case he has a PAN otherwise @20% on Rs. 25,000/-

You will also have to calculate the service tax on this amount and pay it to the govt. within 5th of next month. You can then claim service tax credit on the amount of service tax so paid by you. i.e. u deduct tds on 25,000 and also pay service tax and take credit for this service tax paid.

SANJAY TALATI

SANJAY TALATI (Expert)
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07 December 2010 In the matter of service tax, in certain cases the service tax liability is fastned on the service availer or service enjoyer.
The service enjoyer itself has to get the
ST regn, deposit the service tax , file the ST returns and comply with all the formalities. GTA service is one such service. Here, the Company, Factory Owner, corporation established under any law, society regd under the societies Registration Act, co operative society, any dealer of excisable goods, any body corporate or partnership firm etc. are the entities from which the Transporter is not required to charge the service tax and the above mentioned entities are required to get itself registered with the dept.

This is the Input service for such entities and they can avail the cenvat credit of the service tax paid.

The payer of the amt. to the transporter has to deduct TDS only on the value of Invoice raised by the Transporter and has not to add the ST which he has to ascertain and deposit while making the payt. to the Transporter.

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