Tds section194c query

Page no : 2

Rup Kumar (finance manager) (288 Points)
Replied 06 June 2011

TDS is to be deducted on gross amount of bill (insluding contract charges and service tax) -Sec194C.

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jigneshpatel (Accountants) (25 Points)
Replied 18 June 2011

TDS had to be deducted on the service tax component is well....

Only in the case of rent income tds is not to be deducted on service tax otherwise in every case tds is to be deducted on gross amount.

CBDT has given clarification on the matter by issuing circular stating that u/s 194-I TDS is deductible only on the rental income & not on service tax (circular no. 4 dated 28-04-2008) and u/s 194-J TDS is deductible on gross amount i.e. inclusive of service tax. (Dated 30-06-2008). The reason given by CBDT are that provisions of section 194-I requires deduction of tax at sources on "any income by way of rent", whereas provisions of section 194-J requires deduction of tax at sources on "any sum payable" by way of professional fee, for technical services, royalty & non compete fee.

CBDT states that as 194-I requires deduction on income & service tax does not form part of income, thus TDS is not deductible on TDS. While in case of 194-J CBDT lays stress on "any sum payable" & forgets the part "by way of professional fee, fee for technical services, royalty & non compete fee." Now, Service tax does not form part of professional fee, it is over and above the professional fee which the service provider has to collect from the service recipient & pay to government. Thus it is not part of "any sum payable by way of professional fee"