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Deduction of TDS u/s 194C

CA. Rashi Goyal (Chartered Accountant) (512 Points)

19 June 2009

In the first year the tax is paid on the amount which exceeds the threshold limit. In the subsequent years the tax is to be paid on the whole amount without any exemption. Now my query is if in any year the total value of services provided is less than the exemption limit than what should be the tax liability.

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9 Replies

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 19 June 2009

Section 44 AE applies if the no. of vehicles is less than 10. Now the no. of vehicles exceeds the limit of 10. You ceases to be covered by section 44 AE. You are required to deduct TDS if you are covered under section 44AB.

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Jaspreet Singh (Director) (30 Points)
Replied 19 June 2009

Originally posted by :CA. Rashi Goyal
"	Section 44 AE applies if the no. of vehicles is less than 10. Now the no. of vehicles exceeds the limit of 10. You ceases to be covered by section 44 AE. You are required to deduct TDS if you are covered under section 44AB.	"

I Personally own just 7 vehicles the rest are attached vehicles. so won't I still be covered under sec 44AE

Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 19 June 2009

Rashi

If any party get registered with service tax then they have to pay service tax irrespective of their service value..

Take a exmaple that like the total value of services in 1st year is more than 9 lacs but less than 10 lacs then he should get registered himself to depptt.

And then next year like the value of services is rs. 8 lacs , even then he has to pay service tax to depptt.

Only by doing one thing he escape himself from service tax i.e. at the beggining of year if he projects that his total services for that F.Y. is less than 10 lacs then he should get cancel his R.C . Only then he escape himself from service tax.

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 20 June 2009

Section 44AE is applicable if you own less than or equal to 10 vehicles at any point of time during the PY. Hence, there is no obligation to deduct tax u/s 194C

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 20 June 2009

Mr. Gupta,

The liability to servide tax arises only of the value of taxable services rendered during the immediately preceding PY exceeds Rs. 10 Lakhs. Registration cannot be the criteria to do away with the benefit given by the law. If the value of services rendered do not exceed Rs. 10 Lakhs at any point of time during a year [say FY 2008-09], then a assessee is not liable to collect ST in next FY [i.e., 2009-10] until the aggregate of first consecutive payments exceeds Rs. 10 Lakhs.

Kindly correct me if am wrong

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Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 20 June 2009

Mr jain

Minimum requirement for the registration is Rs. 9 lacs and the minimum requirement for the collection & payment of service tax is Rs. 10lacs. If once you gor urself registered in service tax then you have to collect service tax & paid to govt. even ur taxable services is less than 10 lacs in such financial year.

So my point is that suppose you get urself registered in service tax say in 2008-09 as ur taxable services is 9.50 lacs , then for next F.Y. i.e. 2009-10 you should project ur estimated taxable values of services. And if your projection is less than 9 lacs then u shuld cancel ur RC otherwise dont.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 20 June 2009

In my opinion the registration under service tax has not bearing on the taxability. One can be regsitered and still claim the exemption under not.6/2005 upto Rs.10 Lakhs. Mr. Pavan Jains views appear apt.

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 22 June 2009

I do agree with Mr. Pavan & Mr. Madhukar. But still in dileama, what to do either to avail the exemption till 10.00 lakh or surrender service tax registeration but i hope that in future the client will be able to fetch some business which exceed Rs. 10.00 Lakh.

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 23 June 2009

There is no provision in service tax law that requires payment of taxes is precondition for registration. The benefit of basic exemption is not limited only to unregistered service providers. The benefit is extended to small service providers, whether registered or otherwise