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Whether TDS to be deducted on the service tax

10 May 2007

Whether TDS amount should be deducted on the gross amount of the bill (i.e. inclusive of Service Tax ) or on the net amount

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15 Replies

Suman (13 Points)
Replied 10 May 2007

Yes TDS is required to be made on gross value of the bill including service tax

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grandboy (13 Points)
Replied 10 May 2007

Dear PMJ

The TDS to be deducted depends on the type of contract. In case it falls under 194C and 194J, the TDS is to be deducted on the amount excluding Service Tax, in the rest of the cases, amount to be deducted is inclusive of Service Tax.

The difference is because, 194C and 194J applies to "Income" payable whereas the other sections for "any sum" payable.

Bye,
VS

Venu Madhav (16 Points)
Replied 10 May 2007

Hi I am working in a Software company as accountant and deducting TDS on net bill excluding service tax. Even our auditors not objected to it. But you are saying different things. Are you sure plz?

Ca Gaurav Arora (13 Points)
Replied 10 May 2007

[quote=pmj (Guest)]Whether TDS amount should be deducted on the gross amount of the bill (i.e. inclusive of Service Tax ) or on the net amount[/quote]

t.d.s. should be on net amount because only net will that person's income

Manish (16 Points)
Replied 10 May 2007

[quote=pmj (Guest)]Whether TDS amount should be deducted on the gross amount of the bill (i.e. inclusive of Service Tax ) or on the net amount[/quote]

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Mohit Jain (CHARTERED ACCOUNTANT) (86 Points)
Replied 10 May 2007

T.D.S IS TO BE DEDUCTED ON THE AMOUNT EXCLUDING SERVICE TAX PROVIDED BREAK-UP IS CLEARLY GIVEN IN THE BILL FOR SERVICE TAX SEPERATELY. IF NO SUCH BREAK-UP IS GIVEN THEN YOU CAN DEDUCT T.D.S. ON THE WHOLE AMOUNT.

Sramesh (28 Points)
Replied 10 May 2007

dear vs
sec 194c as well as sec 194j says any sum only and not income pl check the provisions and act accordingly

s.ramesh

asdlj (13 Points)
Replied 10 May 2007

The One Says:

[b]Though it defies conventional economic logic of levying a tax and would therefore result in a tax on already taxed amount and the tax thereon[/b]; The tax is required to be deducted at source on the [b]gross amount of bill[/b] which is inclusive of service tax as per the clarification issued by the Department. CBDT in [b]circular no. 715 [/b]has clarified that Section 194 C and 194 J refer to "any sum paid" and obviously reimbursement cannot be deducted out of bill amount for the purpose of TDS. Therefore, considering the above circular and the amount to be debited in books as expenditure, the tax has to be deducted on the entire amount of bill inclusive of service tax.

Therefore in short TDS on Gross Amount including service tax.

Yashwanth Jain (70 Points)
Replied 10 May 2007

Tds should be deducted only on the net amount because service tax will go the govt A/c and if u deduct tds on gross then there is no meaning in it, u are deducting tds on ur services as well as on service tax which will not be retained by u or form part of your income,hence tds has to be deducted on the net amount only. :)

dflajs (13 Points)
Replied 10 May 2007

The One Says:

Logically what Yashwanth jain has said is correct but what about the circular I dont think it would be wise to ignore it.

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Rajeev Gupta (13 Points)
Replied 10 May 2007

TDS should be deducted on Net amount exclueding service tax if it is clearly shown in bill

Rajeev

(Guest)

Originally posted by :Paras Jhaveri
"	Whether TDS amount should be deducted on the gross amount of the bill (i.e. inclusive of Service Tax ) or on the net amount	"

neha AWASTHI (hh) (230 Points)
Replied 04 December 2008

Section 194C

Any person responsible for

paying any sum to any resident, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct TDS at specified rates

Section 194I

Any person, not being an individual or a Hindu undivided family, who is responsible for

paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at specified rate.

As discussed above that in some cases TDS have to be deducted when any

sum of amount is paid and in other cases, TDS has to be deducted only on income of the nature as specified under the relevant provisions. As per these two clarifications, it can be said that where the TDS have to be deducted on sum of amount then no deductions etc. have to be made and TDS have to be deducted on total sum paid subject to any contrary provisions i.e. inclusive of Service tax. But where the TDS have to be made on income then TDS should be deducted only on income and should not be deducted on Service Taxes etc.

PRATEEK (ACA) (102 Points)
Replied 19 June 2010

AS PER CIRCULAR NO. A/ 2008 TDS IS TO BE DEDUCTED INCLUSIVE OF SERVICE TAX IN CASE OF 194 J ,WHEREAS IN 194 I (PAYMENT OF RENT ) TDS HAS TO BE DEDUCTED EXCLUSIVE OF SERVICE TAX