Dear Professional Colleague,

No TDS on Service Tax if shown separately

Pursuant to an important judgement of the Hon’ble Rajasthan High Court, in the case of Commissioner of Income Tax (TDS), Jaipur Vs. M/s. Rajasthan Urban Infrastructure [2013 (8) TMI 12 – RAJASTHAN HIGH COURT] holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Income Tax Act, 1961 (“the Act”).

Earlier, vide Circular No. 4/2008 dated 28-04-2008 it was clarified that tax is to be deducted at source under Section 194-I of the Act, on the amount of rent paid/payable without including the service tax component. Representations/letters has been filed to CBDT seeking clarification whether such principle can be extended to other provisions of the Act also.

CBDT has examined the matter afresh and clarified vide Circular No. 1/2014 dated 13-1-2014 -“TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax component comprised of payments made to residents” that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/ payable without including such service tax component.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

CLICK HERE FOR CIRCULAR

or

http://www.casansaar.com/notification-detail/CBDT-exempts-deduction-of-tax-from-service-tax-component-if-its-charged-separately/1862.html

Thanks & Best Regards.
 
Bimal Jain
FCA, FCS, LLB, B.Com (Hons)

F-30/31/32, Pankaj Grand Plaza

1st Floor, Mayur Vihar, Phase–I, Delhi – 110091 India

Desktel:+91-11-22757595; Mobile:+91 9810604563

email: bimaljain@hotmail.com