Deduction of tds
This query is : Resolved
15 February 2012
OUR COMPANY HAS TO PAY COMMISSION TO PARTY
AND PARTY HAS RAISED INVOICE OF COMMISION PLUS SERVICE @ 10.3%
e.g
COMMISSION RS 100000
SERVICE TAX RS 10300
TOTAL RS 110300
pLEASE ADVISE TDS SHOULD BE DEDUCTED ON RS 100000 OR RS 110300.
PLEASE ALSO REFER INCOME TAX SECTION IF ANY REGARDING THIS.
AND PARTY HAS RAISED INVOICE OF COMMISION PLUS SERVICE @ 10.3%
e.g
COMMISSION RS 100000
SERVICE TAX RS 10300
TOTAL RS 110300
pLEASE ADVISE TDS SHOULD BE DEDUCTED ON RS 100000 OR RS 110300.
PLEASE ALSO REFER INCOME TAX SECTION IF ANY REGARDING THIS.
15 February 2012
Tax shall be deducted on Rs. 100000.
The issue of TDS on service tax is getting hotter by the day. This issue got fuel with the issuance of a circular by the CBDT. In this circular, board has clarified that tax deduction at source (TDS) under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax. [Circular no. 4 dated 28-4-2008]
After this clarification, every body was of the view that the principle enunciated by this circular is applicable to all the payments made by the assessee and accordingly no TDS is deductible from on the part of service tax whether it is professional's bill or contractor's bill.
But, to settle the issue, CBDT has issued another clarification vide circular F. NO. 275/73/2007IT(B) dated 30-6-2008. In circular CBDT has clarified that the scope of benefit of Circular no. 4 dated 28-4-2008 can not be extended to the payment made under section 194J (Fees for professional and technical services).
Therefore, TDS is to be deducted on the gross amount inclusive of service tax where the payment is being made u/s 194J.
From the reading of both the clarifications, the reasons for two stands in two situations can be discussed as under:
Chapter XVII - Part B - Deduction at source
Section 194J - Sub Section (1) starts as:
(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—
xxxxxxx
Section 194I - the provisions of this section starts as:
Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall…………
On reading of Sec 194H. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of Commission, shall…………
Therefore Tax shall be deducted on Rs. 100000 only.
xxxxxxxxx
The issue of TDS on service tax is getting hotter by the day. This issue got fuel with the issuance of a circular by the CBDT. In this circular, board has clarified that tax deduction at source (TDS) under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax. [Circular no. 4 dated 28-4-2008]
After this clarification, every body was of the view that the principle enunciated by this circular is applicable to all the payments made by the assessee and accordingly no TDS is deductible from on the part of service tax whether it is professional's bill or contractor's bill.
But, to settle the issue, CBDT has issued another clarification vide circular F. NO. 275/73/2007IT(B) dated 30-6-2008. In circular CBDT has clarified that the scope of benefit of Circular no. 4 dated 28-4-2008 can not be extended to the payment made under section 194J (Fees for professional and technical services).
Therefore, TDS is to be deducted on the gross amount inclusive of service tax where the payment is being made u/s 194J.
From the reading of both the clarifications, the reasons for two stands in two situations can be discussed as under:
Chapter XVII - Part B - Deduction at source
Section 194J - Sub Section (1) starts as:
(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—
xxxxxxx
Section 194I - the provisions of this section starts as:
Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall…………
On reading of Sec 194H. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of Commission, shall…………
Therefore Tax shall be deducted on Rs. 100000 only.
xxxxxxxxx
Message likes :
1 times
17 February 2012
TDS is to be deducted on full amt of Rs.1,10,300/- as the circular specifically mentions that in case of TDS u/s 194I ST is not to be included in the amount. However commssion is deducted u/s 194H as such the ST amount is to be included to calculate the TDS amount
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- GST ON EXPORT COMMISSION
- RCM INVOICING FROM NOV-2024
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
Trending Online Classes
CAclubindia
