Tds on service tax component

Where under chapter VII B it says that we need to deduct tds on service tax debited to p n l?

1/2014 is applicable to every1 and no tds is deductible on the servcie part of the transaction.

AS PER CIRCULAR NO 01/2014 DATED: 13- JAN-2014

No TDS is required to be made on the service tax component, if the same is indicated separately.

Case law for no deduction of TDS on the Service Tax Component under section 194J of the Income Tax Act, 1961

The judgment of the Hon'ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v.  Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

Decision of the Board

The Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

Following section also covered by the circular

1. 194C(1) Contracts
2. 194C(2) Sub-contracts/ Advertisements
3. 194D  Insurance Commission
4. 194G Commission on sale of lottery tickets
5. 194H Commission or Brokerage
6. 194I Rent (Land & building) furniture & fittings) Rent (P & M , Equipment)
7. 194 IA TDS on transfer of immovable property other than agriculture land (w.e.f. 01.06.13)
8. 194J Professional/Technical charges/ Royalty & Non-compete f
9. 194J(1)(ba) Any remuneration or commission paid to director of the company (Effective from 1 July 2012)
10. Payment made to Resident all other section covered under chapter XVII-B of the Income Tax Act, 1961

Following points/conditions should be noted given under in new circular 01/2014 dated 13.01.14 to get exemption on TDS on service Tax

1. The payment should be made to Resident so all payment made to non-residents, tds is to be deducted including service tax amount.
2. Service Tax amount payable shall be indicated separately in term of Agreement/Contract between payer and payee.

If both the above conditions are satisfied then no need to deduct TDS on service tax part.

Regards

Manoj Sadaria