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Should i deduct tds including service tax

Sr. Admin & Finance Officer

Dear All,

 

I want to know if i should deduct tds including service tax or deduct with including it. There are two of them in which i am little confused these are Rent on Machinery  and Rent on Building. Where % of TDS on Machinery is 2 and 10 on building.

 
Reply   
 

Dear Kamal,

 

You Should deduct TDS on Gross amount excluding S.tax. it means

Service Tax = (Amount + TDS)*12.36%

and

TDS = (Amount paid + TDS)* TDS Rate (i.e.2% / 10%)

 

 
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Chartered Accountant


CBDT Circular: CIRCULAR NO. 4/2008, (dated 28.04.2008) Representation / letters have been received in the Board seeking clarification as to whether TDS provisions under Sec. 194- I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax ) or net rental amount payable (exclusive of service tax ) The matter has been examined by the Board. As per the provisions of 194-I, tax is deductible at source on Income by way rent paid to any resident. Service tax paid by the tenant doesnt 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 TDS under Sec 194-I of Income-tax Act would be required to be made on the amount of rent paid / payable without including the service tax.

 
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Agree with akshy.

In 194I, it was clearly stated that 'TDS on Income'. So, ST portion is not an income to the landlord.

Where as in case of 194J, it was stated that 'TDS on Amounts received'. So as it is clearly stated to deduct TDS on AMOUNTS RECEIVED, above logic will not apply and there fore, TDS is deductible.

 
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B.Com, CA, CS, LLB


Agree with Akshay,

 

Kindly refer the wording of section 194I and another deducting section i.e. 194C, J etc....These sections speak about "Any sum payable" while 194I speaks about "ANy Income".

 

These two terms are clearly distinguishable and denotes different meaning.

 

Hope your query is now resolved.

 

For 194I purpose, TDS will be on only rental amount and not on service tax amount.

 

Thanks

 

Mihir Doshi

 


Total thanks : 4 times

 
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MANAGER ACCOUNTS


CBDT Circular: CIRCULAR NO. 4/2008, (dated 28.04.2008) Representation / letters have been received in the Board seeking clarification as to whether TDS provisions under Sec. 194- I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax ) or net rental amount payable (exclusive of service tax ) The matter has been examined by the Board. As per the provisions of 194-I, tax is deductible at source on Income by way rent paid to any resident. Service tax paid by the tenant doesnt 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 TDS under Sec 194-I of Income-tax Act would be required to be made on the amount of rent paid / payable without including the service tax. Right said.agree


Total thanks : 1 times

 
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is TDS deducted u/S 194B, 194D, 194G, 194H aslo charge  on gross amount (i.e. exclusive amount of service tax) as  they are also charged on income?

 
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Chartered Accountant


In case of TDS u/s 194D 194G 194H TDS shall be deducted on AMOUNT EXCLUSIVE OF ST whereas, in case of TDS U/s 194C 194 J TDS shall be deducted on AMOUNT INCLUSIVE OF ST

 
Reply   
 

In case of TDS on Rent i.e. u/s 194I, on amount exclusive of service tax. In all other cases, on gross amount, i.e. amount inclusive of service tax.


Total thanks : 1 times

 
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MANAGER ACCOUNTS


YES AGREE WITH ABOVE.....

 
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