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Tds under new reverse charge method of service tax (Income Tax)

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This query is : Resolved

Author : Anonymous

( Author )
16 July 2012

under new service tax provisions, service tax is required to be deposited by receiver of service by reverse charge method.

Now, whether TDS is to be deducted on the amount inclusive of service tax or not, under both situations when service tax is mentioned in invoice and when service tax is not mentioned in invoice.

Thanks,


Member (Account Deleted)

( Expert )
16 July 2012

In case of Rent tax is to be deducted on amount of rent & not on service tax part. In case of all other payments liable for deduction of tax, tax to be deducted on gross amount.


CA Prashant Gupta

( Expert )
16 July 2012

There is only 194-I (Rent) on which TDS will be deducted on exclusive of service tax. in any other section TDS will be deudcted on full amount (inclusive of service tax)
Now in revese charge scheme bill will be of with service tax amount. so TDS will be deducted on full amount. income tax provision don't give any exemption on this that receiver of service is depositing service tax.
if service tax is not mentioned on bill then see whether a separate bill is raised for service tax if yes then full TDS on that service tax bill


Author : Anonymous

( Author )
16 July 2012

Dear prashant,
thanks for your response, but in reverse charge method, why separate bill will be issued for service tax, lets assume if 50% service tax is to be deposited by receiver, & only 50% service tax is mentioned on invoice, then whether TDS will be deducted on full amount of service tax or only 50% portion of it which is mentioned on invoice.


CA Prashant Gupta

( Expert )
16 July 2012

I replied only for your Q's Second part. in which you asked service tax is not mentioned on invoice. So I told only for service tax supplemantary invoice is issued.
Now in reverse charge also TDS should be deducted on full amount. Becasue bill is of full amount. in present scanrio my opinion is this.
Because there is no difference guidlines in TDS on this matter and even service tax doesn't say to issue bill on half service tax. you must mentioned full service tax on bill so full TDS will be deducted


CA Dileep Surya Kumar

( Expert )
06 August 2012

In my opinion, Normally TDS should be deducted on Gross Amount except for TDS on rent
u/s 194I.

The present question relates to whether gross amount includes service tax borne by service provider and service receiver /only the portion borne by the service provider is the question.

I think In case of reverse charge method, there is no need to show the service tax component that is to be paid by service receiver. Even if not so, there is no obligation of the service receiver to pay the service tax to the service provider i.e it should not form part of gross amount paid/ payable to the service provider. And it is the obligation of the service receiver pay to the extent specified under Notification No. 30/2012, directly to the government.

Hence, TDS should be deducted on Gross amount that includes only the portion of service tax borne by the provider of service.




CA PRAVEEN SINGH

( Expert )
06 August 2012

Yes Agree with all..
TDS IS DEDUCTED INCLUDING SERVICE TAX..EXCEPT
TDS ON RENT..U/S 194I

AS PER CBDT CIRCULAR NO 4/2008.DATED 28-04-2008


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