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TDS excluding service tax

anish (Chartered Accountant) (118 Points)

21 May 2008

hi all,

based on the recent circular regarding tax deduction excluding service tax in case of rent ,, can i advise my client to deduct tax excluding service tax in case of professional charges also.?

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6 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 21 May 2008

The clarification has been issued only for rent

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dipesh (ca final student) (52 Points)
Replied 21 May 2008

A recent circular issued by the CBDt to clarify that TDS is to be deducted on amount of bill of rent excluding service tax.So the same will be applicable for other services also.So you can advice your clients to deduct TDS on your Professional Fees and not on the gross amount including service tax.Because service tax collected by any service provider is not his income.And the concept of "TDS" is that it should be deducted on fees charged by service provider.So on any kind of services where TDS is to be deducted ,then it should be on basic Fees income charged ny the service provider.

1 Like

S. Kumar (Business) (56 Points)
Replied 21 May 2008

----- Forwarded Message ----
From: kumars_ca <kumars_ca @ yahoo.com>
To: kumars_ca @ yahoo.com
Sent: Wednesday, May 21, 2008 9:30:19 PM
Subject: Fwd: Re: [stbangalore] Re: Is TDS applicable on Service Tax

--- In stbangalore @ yahoogroups.com, "Suresh Srinivasan"
<soori007 @ ...> wrote:

Dear Sanjay,

Thanks for your valid inputs.

Dear Vishwa,

The CBDT has recently clarified on the deduction of TDS u/s 194-I.
Though it
is issued under the relevant section for payment of rent, the logic
and the
thought of the CBDT should be read between the words.

We have been deducting TDS on the whole amount to be on a safer side
earlier. But now since CBDT has issued the clarification, we can
apply the
same rule for all kind of payments as service amount is collected and
paid
to the government immediately. We act as an agent for the government.

Your views are welcome.

--
Cheers!!!
Suresh Srinivasan.
+91 98 44 28 05 51

On Sun, May 18, 2008 at 7:52 AM, kumars_ca <kumars_ca @ ...> wrote:

> Hi Suresh,
>
> I do agree with you that in usual course, the TDS may be deducted on
> the Gross Value (Value of Service + Service Tax).
>
> However, the TDS is an application to deduct the Tax on the Income
> and not on the Tax Component.
>
> Here the Service Provider is an agent who acts on behalf of the
> Government to collect the Service Tax and deposit to their account.
> While doing so why the Service Provider should be penalised to the
> extent of TDS on Service Tax?
>
> It is true that TDS is a credit given to the Service Provider but
> when he gets back the refund of TDS is a matter of concern.
>
> In my opinion, there should not be any Deduction of Tax (TDS) on
> Service Tax component.
>
> Regards,
>
> Kumar
>
> --- In stbangalore @ yahoogroups.com <stbangalore%40yahoogroups.com>,
> "Suresh Srinivasan"
> <soori007 @ > wrote:
> >
> > Dear Sanjay,
> >
> > Regarding TDS deduction, as usual practice, its always better to
> deduct on
> > the aggregate you pay which inlcudes ST and service amount.
> >
> > --
> > Cheers!!!
> > Suresh Srinivasan.
> > +91 98 44 28 05 51
> > ***Inside every older person is a younger person wondering, "What
> the hell
> > happened?***
> >
> > On Wed, Apr 2, 2008 at 10:15 PM, sanjayatumkur <sanjayatumkur @ >
>
> > wrote:
> >
> > > Dear Sir,
> > >
> > > Thank you for your reply. I agree that the Service Tax Liability
> is
> > > worked out on the Gross Value of the Service i.e. inclusive of
Tax
> > > Deducted on the Value of Service.
> > >
> > > My querty is to know whether the Tax Deduction is applicable on
> the
> > > Service Tax amount?
> > >
> > > Can you please provide a clarity on the following:-
> > >
> > > 1. Value of Service - Rs. 10,000/-
> > > 2. Add: Service Tax @ 12.36% - Rs. 1,236/-
> > > --------------
> > > Total Value of the Invoice - Rs. 11,236/-.
> > > ==============
> > > On the above on which amount the TDS is applicable:-
> > >
> > > 1. Is it applicable on the Value of Service which is Rs.
10,000/-
> or
> > > 2. Is it applicable on the Total Value of Invoice which is Rs.
> > > 11,236/-.
> > >
> > > Regards,
> > >
> > > Sanjaya
> > >
> > >
> > >
> > >
> > >
> > >
> > > --- In stbangalore @ yahoogroups.com <stbangalore%
40yahoogroups.com>,
> Commissioner Service Tax
> > > Bangalore <servicetaxbangalore @ > wrote:
> > > >
> > > > Dear Shri Sanjaya,
> > > >
> > > > The TDS amount will have to be taken as a part of the gross
> amount
> > > received for the purposes of calculation of the Service tax
> > > liability.i. e. you have to add the amount retained towards TDS(
> by
> > > the payer , from the total to be paid for provision of taxable
> > > services) to the money actually received by the provider of
> taxable
> > > services (net of TDS), in order to arrive at the gross amount.
> > > >
> > > >
> > > > JC (SYS)
> > > >
> > > > Visit us at https://servicetaxbangalore.gov.in
> > > >
> > > >
> > > >
> > > > Join the Discussion group at
> > > > https://groups.yahoo.com/group/stbangalore
> > > >
> > > >
> > > >
> > > > This is a group set up to facilitate individuals, members of
> trade
> > > and industry organizations, who are either service tax assesse'
or
> > > have an interest in knowing about service tax in India. This
> group is
> > > being run and managed under the supervision of the Commissioner
of
> > > Service Tax, Bangalore. In case, you wish to communicate with us
> > > regarding any aspect of service tax or post a comment, please
feel
> > > free to do so.
> > > >
> > > >
> > > >
> > > > ----- Original Message ----
> > > > From: sanjayatumkur <sanjayatumkur @ >
> > > > To: stbangalore @ yahoogroups.com <stbangalore%
40yahoogroups.com>
> > > > Sent: Monday, 31 March, 2008 9:16:54 PM
> > > > Subject: [stbangalore] Is TDS applicable on Service Tax
> > > >
> > > > Dear Sir,
> > > >
> > > > Is Tax Deduction at Source applicable on the Service Tax
amount
> as
> > > well?
> > > >
> > > > It is observed that the TDS is worked out and deducted on the
> total
> > > > value of the Service Invoice i.e. Value of Service and the
> Service
> > > Tax
> > > > as applicable.
> > > >
> > > > Can you please provide a clarity on this?
> > > >
> > > > Regards,
> > > >
> > > > Sanjay
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > Chat on a cool, new interface. No download required. Go to
> > > https://in.messenger.yahoo.com/webmessengerpromo.php
> > > >
> > >
> > >
> > >
> > > ------------------------------------
> > >
> > > Yahoo! Groups Links
> > >
> > >
> > >
> > >
> >
> >
> > --
> >
>
>
>

--

--- End forwarded message ---