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Tds applicability

Shiva Nishad (Student CA Final ) (25 Points)

07 June 2016

Whether TDS is to be deducted or not in the following case:

Professional Fees : Rs. 29,000

Service Tax (15%) : Rs. 4,350

Total : Rs. 33,350

Service Tax shown separately in the Bill.

Whether limit of Rs. 30,000 needs to included of Rs. 4,350, while checking TDS applicability.

( I have this confuion since the provision contains "the sum to be paid or credited")

Thanks.

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10 Replies

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 07 June 2016

Pursuant to an important judgement of the Hon’ble Rajasthan High Court, in the case of CIT (TDS), Jaipur Vs. M/s. Rajasthan Urban Infrastructure [2013 (8) 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 Dept.has also issued Circular No.1/2014 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.

1 Like

Rahul Verma (CA-Final) (484 Points)
Replied 07 June 2016

No TDS is not liable to deduct as TDS not applicable on the serice tax as exempted in notification.....

ishajain (student) (61 Points)
Replied 07 June 2016

Agree with above comments

CA Kalpesh Patel (CA) (180 Points)
Replied 07 June 2016

agreed with expert

Raghavendra (Accountant) (53 Points)
Replied 07 June 2016

Agree with above comments

SHRAWAN KUMAR YADAV (CA FINAL-M.COM) (58 Points)
Replied 08 June 2016

agree with expert .

Shiva Nishad (Student CA Final ) (25 Points)
Replied 08 June 2016

Thank you all...

Rahul Panwar (nothing) (123 Points)
Replied 08 June 2016

disgree,

hii shiva how are you.(AMC)

for the purpose of checking limit we consider the amount to be paid or payable to payee(inclusive of ST).... but As per Circular we deduct the TDS on amount excluding of ST.

1 Like

DEEPU HN (Associates) (360 Points)
Replied 08 June 2016

Agree With Experts,

If service tax shown separetly in bill we will exclude service tax portion for deduction of TDS as per department circular,( department circular intention to exclude service tax amount whicle deducting TDS if shown seprately) so why we need to include service tax portion for checking limit even same is not liable to dedcut under income tax act.

Thanks in advance

1 Like

Rahul Panwar (nothing) (123 Points)
Replied 08 June 2016

hello deepu, circular only deal with deduction of tds on service tax portion, not with applicability of 194J so here we have refer the sec 194J which tell us when will 194J applicable. i.e amount payable or paid exceed 30000/- (inclusive of ST), 194J will apply.