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TDS on bills having service tax or luxury tax

10 May 2007

the relevant sections for TDS states that TDS is to be deducted on the sum/amount paid.

expenses such as manpower consultancy/ professional charges / room rent in hotels contain either service tax component / luxury tax.

now should TDS be deducted on the entire bill amount or bill amount less service tax/ luxury tax?

most clients argue that service tax/ luxury tax is already a form of indirect tax. deducting TDS on it would be burdening.

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4 Replies

D Vijayakumar (CA Job) (13 Points)
Replied 10 May 2007

It should be on the gross amount of the bill only, which includes all the taxes etc

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Ashwani (13 Points)
Replied 10 May 2007

Dear Friend
TDS will be deducted on bill amount. No tax will be deducted for tds purpose.

Shuba Reddy (28 Points)
Replied 10 May 2007

thank u. but clients dont accept wen we tell them this. they want a circular. is there a circular in this regard?

Nbatra (22 Points)
Replied 10 May 2007

Dear Friend,

There is no circular in this regard. However, clients can be convinced that the TDS is on the entire expense or the account head booked by them in their books and failing which would now even attract disclosure in the new 3CD format by the CA's. Hence, TDS shud be deducted on the gross bill amount.