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No TDS on ST portion u/s 194 I !!!!

Manjunath ganapathy (Chartered Accountant Article) (145 Points)

03 May 2008

Hi All !!

I came across a new circular from CBDT stating that no TDS u/s194 I is required to be deducted on ST paid (The reason being as it is not an income to the owner of the property !)

Now going by the same analogy can we conclude that for all the provisions of source deduction,TDS is not to be deducted from Gross invoice but on net invoice (net of ST) ? if we take this conclusion it will be in contradiction with Mumbai commissionerates circular which states TDS is to deducted on Gross invoice (i.e., including ST)

can anybody through some light on this.....

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10 Replies

CA. Kirti S. Ganatra (Service) (1461 Points)
Replied 03 May 2008

Where u get this circular, can you tell me number of circular

CA Akshat (article) (422 Points)
Replied 03 May 2008

u r right... we have to deduct tds on net of service tax bill

e.g. ur bill is 100 and service tax is 12.36rs.u have to deduct 10.3% of rs 100

(Guest)

This circular 4/2008 dt 28.4.2008 will supersede all previous circulars or clarifications issued by Department / commissionrates for two sections only 194I and 194 H. W.e.f 1/4/2008, this circular will be effective and besides 194 I it will also applicable for 194H.

For other sections i.e 194 H or 194 C the old practice will remains the same.

(Guest)

Circular No is 4 /2008 dated 28.4.2008 and available of site of CBDT and caclubindia

(Guest)

Direct Tax Circular No. 4 dated 28 April 2008

(Guest)

Direct Tax Circular No. 4 dated 28 April 2008

(Guest)

First of all CBDT circular overrules the clarification of other commisioinerates...

now your question wud be whether same anology can be drawn for other sections? so the answer is: " in all other sections in TDS chap.the words" Amt.paid or credited" are written but in the sections 194J and 194I "on income" are written. so the same anology can be drawn for S. 194J also. but as a safegaurd we deduct it from the whole amount....

Circular's language:-

Service tax paid by the tenant doesn't partake the nature of "income" of the landlord. The landlord only acts as a collecting agency for Government for collection of Service Tax. Therefore it has been decided that tax deduction at source (TDS) under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax.

(Guest)

can you please quote the circular no.

CA RAMESH KUMAR AHUJA (CA, DISA, LLB) (5452 Points)
Replied 07 October 2008

Circular No has been mentioned by Mr. Sanjeev Varshney

deven77 (student) (22 Points)
Replied 08 November 2008

Originally posted by :CA. Kirti S. Ganatra
"	Is this article applicable to whole section or limited to commercial construction? pls inform as early as possible.	"