Should i deduct tds including service tax

Dear Kamal,

 

You Should deduct TDS on Gross amount excluding S.tax. it means

Service Tax = (Amount + TDS)*12.36%

and

TDS = (Amount paid + TDS)* TDS Rate (i.e.2% / 10%)

 

CBDT Circular: CIRCULAR NO. 4/2008, (dated 28.04.2008) Representation / letters have been received in the Board seeking clarification as to whether TDS provisions under Sec. 194- I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax ) or net rental amount payable (exclusive of service tax ) The matter has been examined by the Board. As per the provisions of 194-I, tax is deductible at source on Income by way rent paid to any resident. Service tax paid by the tenant doesnt partake the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, it has been decided that TDS under Sec 194-I of Income-tax Act would be required to be made on the amount of rent paid / payable without including the service tax.

Agree with akshy.

In 194I, it was clearly stated that 'TDS on Income'. So, ST portion is not an income to the landlord.

Where as in case of 194J, it was stated that 'TDS on Amounts received'. So as it is clearly stated to deduct TDS on AMOUNTS RECEIVED, above logic will not apply and there fore, TDS is deductible.

Agree with Akshay,

 

Kindly refer the wording of section 194I and another deducting section i.e. 194C, J etc....These sections speak about "Any sum payable" while 194I speaks about "ANy Income".

 

These two terms are clearly distinguishable and denotes different meaning.

 

Hope your query is now resolved.

 

For 194I purpose, TDS will be on only rental amount and not on service tax amount.

 

Thanks

 

Mihir Doshi

 

CBDT Circular: CIRCULAR NO. 4/2008, (dated 28.04.2008) Representation / letters have been received in the Board seeking clarification as to whether TDS provisions under Sec. 194- I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax ) or net rental amount payable (exclusive of service tax ) The matter has been examined by the Board. As per the provisions of 194-I, tax is deductible at source on Income by way rent paid to any resident. Service tax paid by the tenant doesnt partake the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, it has been decided that TDS under Sec 194-I of Income-tax Act would be required to be made on the amount of rent paid / payable without including the service tax. Right said.agree

is TDS deducted u/S 194B, 194D, 194G, 194H aslo charge  on gross amount (i.e. exclusive amount of service tax) as  they are also charged on income?

In case of TDS u/s 194D 194G 194H TDS shall be deducted on AMOUNT EXCLUSIVE OF ST whereas, in case of TDS U/s 194C 194 J TDS shall be deducted on AMOUNT INCLUSIVE OF ST

In case of TDS on Rent i.e. u/s 194I, on amount exclusive of service tax. In all other cases, on gross amount, i.e. amount inclusive of service tax.

YES AGREE WITH ABOVE.....

BUT U/S 194 I.....NOT J AS MENTIONED ABOVE.

Could some one quote an example for the same.

For example:

Rent Rs 100,000 pm

Service tax =100,000*12.36%=12,360

Gross Total = 112,360

TDS would be =??  112,360*2%   or 100,000*2%

i think it should be 2,000 and balnce sould be paid 110,360.

 

Please clarify

 

 

 

 

 

But why should tds be deducted on service tax? Its not the income for the person who is charging service tax. He is just collecting service tax to pay to central government. 

Dear Member,

 

 

Does the above rule applies only to rent?

Or is that applicable to all? eg. For House keeping services - the company charges service fee + Service tax-- should we deduct TDS only on service fee part? or should we deduct from Gross amount (including Service Tax)?