17 October 2013
Please refer the below file which was posted by me in caclubindia for detailed guidence about this . . https://www.caclubindia.com/share_files/tds-on-service-tax-on-all-payments-except-rent-56695.asp#.Ul9NsVCnqWY
17 October 2013
Logically speaking, TDS is to be deducted from the income of the recipient . Service tax is not an income of the service provider as the service provider would be collecting service tax from the service receiver and depositing this amount with the govt. So, the service tax collected is not an income of the service provider and the service provider is merely acting as an agent of the Govt. So, the logically TDS should not be deducted from the amount inclusive of service tax (i.e. Rs. 16,85,000) and should be deducted from the amount exclusive of service tax (i.e. Rs. 15,00,000)
17 October 2013
The Central Board of Direct Taxes vide Circular No. 4/2008 dated 28-04-2008 , announced that at the time of payment of rent, TDS should be deducted on the amount exclusive of service tax as the landlord is only acting as a collecting agent for government for collecting the service tax. Therefore, TDS on rent should be deducted on the amount without including service tax.
17 October 2013
Based on the viewpoint of the central board of direct taxes, the whole industry stopped deducting TDS on Service Tax and started deducting TDS on the amount exclusive of service tax. However, 2 months later vide Letter F. No. 275/73/2007-IT(B) dated 30-06-2008 , it was announced that the exemption from deducting TDS on Service Tax is only under Section 194I for the rent paid. And therefore TDS on service tax is liable to be deducted on all payments other than for rent paid. Deduction of TDS on Service Tax amount may be logically invalid but sadly the viewpoint of the govt is that TDS on Service Tax should also be deducted (excl. rent) and we all will have to follow the same as this is the law of the land.
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