02 March 2012
As per Circular 4/2008 dated 28.04.2008 TDS under section 194 I shall be done for an amount excluding service tax i.e for an actual rent paid or payable. But if we are paying rent to non resident(Sec 195)what shall be the provisions. Whether the TDS shall be done inclusive of service tax or exclusive of service tax.
02 March 2012
When payment is made to non-resident it will be treated as import of service in most of the cases and in that case service reciver will pay service tax directly to the government. Therfore, TDS will be deducted excluding amount of service tax.
Simple Rule: Except in case of Section 194I, in all other cases where service tax is charged by service provider in his invoice, then TDS will be deducted on gross amount including ST amount, where no service tax is charged there is no issue of TDS on service tax
02 March 2012
Circumstances behind the issue of Circular 4/2008 is to resolve the queries received by the IT Dept u/s 194I. Logic applied by IT Dept. is Land Lord is the collecting Agency of ST and such ST shall not form part of his income.Shall we apply the same logic for the rent payment to nonresident.
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