TDS deduction inclusive of Service tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

29 March 2011 There is a practice of deducting tax at source inclusive of Service tax component is it correct doing so? whether such a deduction amounts to double taxation as what will be the tax bifurcation in such a case?

CA Navin Jain

CA Navin Jain (Expert)
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29 March 2011 TDS HAS BEEN DEDUCTED ON EXCLUSIVE OF SERVICE TAX AMOUNT EXCEPT SERVICE TAX ON RENT

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Querist : Anonymous

Querist : Anonymous (Querist)

29 March 2011 Thanks for the reply sir. I got one more reply from Mr.Subhash Kumar Jha where he says Tds would be on Gross amount in all the cases except in case of Rent where it will be on Net amount exclusive of Service tax component.

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CA Navin Jain

CA Navin Jain (Expert)
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29 March 2011 sorry, i have write the word exclusive instead inclusive.

TDS HAS BEEN DEDUCTED ON INCLUSIVE OF SERVICE TAX AMOUNT EXCEPT SERVICE TAX ON RENT

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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29 March 2011 As per Circular No.4/2008 dated 28.4.2008, it was clarified that TDS on rental payments would be required to be made only on the basic rental amount without including service tax. In other words, TDS should not be made on the service tax portion of the rent. However, this analogy is not applicable to TDS under other sections. So in case of other section TDS to be deducted on amount inclusive of Service Tax.

But your view is correct it results in double taxation. So this rule of deducting TDS on amount exclusive of service tax should be made applicable to all sections instead of only sec 194I.

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