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TDS connfusion

N V S Pawan Kumar (student) (113 Points)

12 December 2007

Suppose a professional gives a bill of Rs9,00,000/- + Service Tax @ 12.36%.So the total bill amount is 10,26,928/- right?

Now please tell me on which amount should TDS be deducted ? On gross fees of Rs. 9,00,000/- or the total fees inclusive of service tax i.e. Rs.10,26,928/- ???

Thanks

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6 Replies

Vinay Ramachandran (Chartered Accountant) (168 Points)
Replied 12 December 2007

hi pawan Logically speaking tax at source should be deducted from income ie frm Rs 9 lakh but the language of the provisions are such that they imply that tax is deducted from the payment paid or payable ie 9 lakh plus service tax. Practically speaking companies deduct tax on the bill amount that is inclusive of service tax. This is an accepted practice. Ttarget='_blank' rel='nofollow' hrefore deduct tax on 10,26,928/-

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(Guest)

Hi Pavan, The tax wil b deducted on the total bil amount. Morever 3 yrs. back an issue came dat whether d TDS wil be deducted on service tax. But now it is wel accepted practice to deduct TDS on total bil amount ony. So go ahead.

Sindhu (Student) (118 Points)
Replied 12 December 2007

TDS has to be deducted inclusive of service tax accoring to a circular issued by Bombay chartered accountants. So, conclusively TDS has to be deducted inclusive od service tax

(Guest)

Dear Pawan TDS has to be deducted on total bill amount i.e inclusive of service tax.

(Guest)

please tell me tds is deductable on service tax charged on transport bill.

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Rams (Accountant) (36 Points)
Replied 13 December 2007

Actually Tds Should be deducted on Rs.900000/- but many of the companies are deducting on the total amt i.e inclusive of service tax. To be on safer side deduct tax on Entire amount of Rs.1026928/- but if ur raising bill to someone then u can inform them to deduct tax only on bill amt & not on stax bcoz in this case tds of 14381 i.e (126928*11.33%) is less recd from party. There is nothing wrong to inform the party to deduct tax on bill amt & not on service tax, bcoz ultimately they r going to decide whether to deduct in bill amt inclusive or exclusive of stax I will suggest everyone to be on safer side deduct tax of your party who r raising bill amt inclusive of stax i.e in this case on 1026928*11.33% But if u r a party in this case then atleast u can inform the other party to deduct tax on Rs.900000 instead of 1026928 & if ur income is less than 1 crore then inform the party to deduct tax @ 10.3% instead of 11.33%