07 October 2013
Dear Sir/Mam, What is reason for TDS on rent on NET VALUE (EXCLUSIVE OF SERVICE TAX)? And why in all other cases on value inclusive of Service Tax?
07 October 2013
The CBDT, based upon the representations received, vide Circular No. 4/2008, dated 28/04/2008, clarified that TDS on rent is deducted u/s 194I, and as the TDS has to be deducted out of income of the recipient and service tax collection is not the income of the recipient, no TDS is required to be deducted on service tax amount. This circular, brought the much awaited clarification, which was also obvious, keeping the intent of legislature, to collect tax on prospective income of receiver and check tax evasion in mind; Based upon this circular the professional and corporate world stopped deduction of tax at source on the service tax amount;
07 October 2013
However, the CBDT, vide Circular No. 275/73/2007-IT (B), dated 30-06-2008, again clarified that the clarification regarding TDS on rent u/s 194 I, will not be applicable to TDS on fees for professional and technical services; as per the provisions of section 194I, TDS has to deducted on ANY INCOME arising out of rent, whereas, as per section 194J, TDS has to be deducted on ANY SUM paid as fees for professional and technical services;
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