Tds u/s 194j deducted on income including service tax

This query is : Resolved

Dheeraj (Querist)
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21 December 2018 Hi,
For F.Y 2016-17, I have billed a company (for consultancy) for 4Lacs/month + Service Tax and they have deducted TDS on total amount (Basic + Service tax). The TDS was deposited and return was filed.

I have filed return u/s 44ADA, wherein Gross Receipts were shown as 48,00,000/- which was inconsistent with the income appearing in Form 26AS ( as 26AS reflected the amount (basic+service Tax)

I have received a notice u/s 143(1)(a) as there was mismatch between the Gross Receipt shown in the return and income appearing in Form 26AS.

I have responded to this notice and explained that TDS has been deducted on Fee + Service Tax Amount due to which the Income Appearing in Form 26AS is higher than the actual receipt shown in the Income Tax Return.

On this, the I-T Department has responded that entire turnover appearing under the Form 26AS (i.e, inclusive of Service Tax) should be declared as turnover u/s 44ADA.

I am not satisfied with the response, as if I consider the response from IT Department, then my Gross Receipts exceeds the amount of Rs 50 Lakhs and I will not be able to file return u/s 44ADA. Also, TDS as wrongly deducted by the deductor and I have shown the correct turnover i.e, basic fee (exclusive of Service Tax)

Can someone suggest what should be done in this case.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 December 2018 unfortunately, you may not be on a very strong footing here. In several cases related to presumptive taxation, it has been held that service tax shall be included in the gross receipts.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 December 2018 please go through this. https://taxguru.in/income-tax/service-tax-will-be-included-in-turnover-for-the-calculation-of-presumptive-profit.html?amp

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