21 September 2012
One of our contractor raises bill of security for say Rs100/- and his portion of service tax i.e 25% of 12.36%(Under latest reverse charge mechanism of Service tax) of 100 means of 103.09/-.Now question arises whether i should deduct TDS on Rs 103.9/- or alos including My portion of service tax also i.e total amount of 12.36% of Rs 100 i.e Rs 112.36/-.
21 September 2012
TDS will be dedcted on "any sum paid or payable" to the person for the bill raised by him. It will be deducted on Rs. 103.09.
How can you add your portion??? Are you paying your portion of ST to the service provider???? Is your portion of ST included in the bill?? have you credited Service provider's account for your ST portion??? Is it the income of the service provider?? Even service tax charged by him is also not an income of the Service provider but becuase section 194C/194J uses the words "any sum" and accordingly, tds is required to deduct on the sum paid inclusive of ST. Nevertheless, your portion of ST will never be included for TDS which is not paid to the Service provider. Also,Section 194I uses the words "any income by way of rent" that is why tds is not deducted on ST in case of rent. There is no second thought on this and TDS will be deducted on the sum paid/payable to the Service provider for the bill raised by him u/s 194C. Pls Read Section 194C. it is very clear and there is no ambiguity on this. Hope, it is very clear to you.
CAclubindia
