04 January 2011
This is a controversy. In my humble opinion, this should not be as we should not tax a tax. For payment of rent this was made clear by a Dept. notification that TDs should be on the net amount. For other section, I think this is still sketchy. Other Experts' opinion would be welcome in this case.
04 January 2011
TDS should be deducted on amount exclusive of service tax in case of Sec 194I (Vide CBDT Cicular No. 4 dated 28-04-2008). In case of TDS under other section TDS should be deducted on amount inclusive of service tax because in above mentioned circular sec 194I has been specificly mentioned. But really this needs a change and TDS should not at all be deducted on Service Tax portion. But till any clarification in this matter we have to follow above rules.
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