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Tds on service tax if no input credit is available

Prashant Balkrishna Thanekar (Accounts Manager) (181 Points)

15 November 2016

I have received bill for commission paid with Service Tax shown separately. In this case I am not liable to take Service Tax Credit because I am not a service provider. I am a dealer so service tax is not liable for me & I am showing gross amount including service tax as an expenses ( In P & L Account). I want to know whether TDS is to be deducted on Gross amount or Basic amount excluding Service TAx

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4 Replies

Thiyagarajan (Article Assistant) (64 Points)
Replied 15 November 2016

Dear Prashanth, TDS Needs to be deducted only on Gross Value of Commision excluding Service tax amount and accounting treatment of treating service tax on commision as a commision expense is wrong , you have to group that under the seperate head of expense "Service Tax Paid"

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Prashant Balkrishna Thanekar (Accounts Manager) (181 Points)
Replied 12 December 2016

but can we avail service tax amount as an expenses

Sanjay S (Chartered Accountant) (1375 Points)
Replied 12 December 2016

As per the CBDT Circular 1/2014 dated 13.01.2014, TDS need not be made on the amount of service tax included in the invoice, provided, the Service tax amount is shown separately.

Since in your case, the ST amount is shown separately, the Tax needs to be deducted only on the Commission amount (Exclude ST)

You can also claim the ST as expense if you have not claimed the same as CENVAT Credit already.

Hope this clarifies the issue.

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