TDS Query

CA. Vineet Grover (Chartered Accountant) (1538 Points)
Replied 06 November 2007

With the advent of service tax, an interesting question has arisen whether tax is deductible at source under the IT Act even in respect of the service tax component of the professional fee/contract amount payable to the service provider/contractor. Though Section 194C requires deduction of tax ``out of sum payable'', it has to be read with Section 190. If the sum comprises a receipt which is patently not income and does not belong to the recipient, such as service tax, such sums should be excluded for the purpose of TDS. Even the ratio laid down by the Supreme Court in the case of Chowringhee Sales Bureau [(1973)87ITR542] that sales tax is a part of the turnover, will not support a view that service tax is part of professional fees as that decision was given in a different context. Service tax law is unambiguous about the status of the moneys collected as it is in the hands of the service provider. So, let there be no TDS on service tax.

CA. Vineet Grover (Chartered Accountant) (1538 Points)
Replied 06 November 2007

With the advent of service tax, an interesting question has arisen whether tax is deductible at source under the IT Act even in respect of the service tax component of the professional fee/contract amount payable to the service provider/contractor. Though Section 194C requires deduction of tax ``out of sum payable'', it has to be read with Section 190. If the sum comprises a receipt which is patently not income and does not belong to the recipient, such as service tax, such sums should be excluded for the purpose of TDS. Even the ratio laid down by the Supreme Court in the case of Chowringhee Sales Bureau [(1973)87ITR542] that sales tax is a part of the turnover, will not support a view that service tax is part of professional fees as that decision was given in a different context. Service tax law is unambiguous about the status of the moneys collected as it is in the hands of the service provider. So, let there be no TDS on service tax.

ASHISH YADAV (Chartered Accountant) (119 Points)
Replied 06 November 2007

as per income tax act, T.D.S is deducted on the the part of income of the reciver. So, service tax and Vat is not part of the the income of the reciver,it is part of income of government of india.so we cannot deduct tax on service tax amount and vat amount.

(Guest)

Service tax collected by the service provider will be ultimately paid to the Govt. A/c. Does anybody think that the service provider need to pay the Net Service Tax (i.e. service tax collected by him after TDS) to the Govt.'s A/c? Why should the service provider pay full Service tax, if he is collecting the same after TDS. So, my opinion is that there is NO TDS ON SERVICE TAX.

(Guest)

what is Sales Tax TDS?

(Guest)

Please mails me the rate of TDS which is deducted on CHA bills i.e services provided by them for i.e. clearing and forwarding, agency charges e.t.c

(Guest)

please tell me details about Co-Operative housing society, shall required or attract any income tax payable if there income is more than Rs 10000/- and why so many housing societies are not paid income tax ? shall govt bodies or Co-op department taken any action.