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TDS on Service Tax element

Sheetal (CA Final Student) (74 Points)

23 October 2007

Hi!

I want to ask whther TDS to be deducted on gross amount payable inclusive of Service Tax or not?

Thanks in advance.

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8 Replies

(Guest)

There is no clear provision in Income Tax Act on this issue. TDS on Service Tax implies tax on tax and sometimes the Bill amount without service tax may be below the taxable limit . However , as prudent practice ,TDS may be deducted on the Gross Bill including service tax.

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Ajay Gumbar (Chartered Accountant) (263 Points)
Replied 23 October 2007

Dear Sailesh,

I absolutely disagree with you. TDS is always deducted on grosss amount of invoice ie. inclusive of Service Tax, Education Cess and SHE Cess.

As per income tax laws, TDS is deducted on amount Credited / Paid. Such amount credited/paid is inclusive of Service tax.

There is no tax on tax hence both are governed by altogether different Acts. Furthermore TDS is just an advance payment of tax.

Regards,

Ajay Gumbar.

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 23 October 2007

tds is on amount including service tax

SANJAY KUMAR SINHA CHOWDHUR (Practice) (41 Points)
Replied 23 October 2007

Yes,TDS has to be deducted on service tax element.

kartik l joshi (chartered accountant) (23 Points)
Replied 23 October 2007

There is a recent circular from the CBDT which says that TDS is to be deducted on gross amount. i.e.billamount plus service tax.

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MAHENDRA IYER (SERVICE) (315 Points)
Replied 24 October 2007

There is recent clarification given by the CBDT on the very same issue and according to the same Tax is to be deducted on the whole amount (incl.: service tax or any other taxes)