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TDS on service tax

Sudhansu (Student) (41 Points)

06 April 2008

Is it fair to Deduct Tax at Source while paying Service tax to the service provider as it does not constitute income to the service provider?

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5 Replies

Prasad R (CA Final) (2128 Points)
Replied 06 April 2008

It's not a matter of whether it's fair to deduct TDS on service tax that is paid to the service provider b'coz since TDS also cannot be held by the one deducting it. TDS also has to be remitted to the govt. Moreover it's not us who can decide on wt amt to deduct tax, it's the govt who makes the law's. Regards Prasad.R

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(Guest)

Dear Professional Colleague,

No TDS should be decuted on the Service Tax. As the same is a government payments and same has to be deposited by the service provider on its receipt. However for ease in filing of the TDS returns and to avoiding any discomforts, TDS is normally deducted on the full amount

(Guest)

TDS to made on all payments, which includes service tax componnet also, in my opinion

suru

CA. Atindra A. Prabhu Bhatikar (practising CA) (68 Points)
Replied 08 April 2008

Dear Sudhansu, in tax there is nothing as 'fair' or 'unfair'. What is written is law and has to be comlied with. Regarding the confusion of TDS on service tax amount, both are independent provisions and do not clash with each other in operation. Tax has to be deducted on the gross amount of the bill inclusive of serivce tax as the wording in section 194C is "any sum paid". In the context of the penal provision under section 40 a (ia) it is advisable to deduct tax on the gross amount inclusive of service tax.