Cbdt circular dated 13.1.2014_stnot to be charged seperately

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This query is : Resolved

CA Vinisha Sahijwani (Querist)

20 January 2014 Under the CBDT circular,the Board has decided 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.

Kindly clarify whether the same should be required on agreement specifically or ST charged separately on Invoice will suffice.

This is because with many vendors there are no such agreements/contracts.

@VaibhavJ

@VaibhavJ (Expert)

20 January 2014 Hi

Separate mention on Invoice is sufficient.

Thx

Ganeshbabu K

Ganeshbabu K (Expert)

20 January 2014 Agreement may not be required in written form as it is not mandated in circular
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.
If servicetax is shown seperately in invoice it will be enough

CA Vinisha Sahijwani

CA Vinisha Sahijwani (Querist)

20 January 2014 Thanks for the guidance. Kindly also let us know the date of applicability of this circular.

@VaibhavJ

@VaibhavJ (Expert)

20 January 2014 Generally its applicable from date of issue of notification!

However if no TDS is deducted earlier also then also it is valid!

Thx

CA Vinisha Sahijwani

CA Vinisha Sahijwani (Querist)

20 January 2014 Ganesh Sir,
As per the circular it is written that "The Board has decided that wherever in terms of the agreement/ contract between the payer and the payee"; Terms of agreement are there in a written agreement only as per my point of view. So it is implied here that the agreement should be written only.

CA Sachin D Jain

CA Sachin D Jain (Expert)

21 January 2014 Agreement need not be in writing because in accordance with the Indian contract act, oral agreements are also valid.

Hence service tax amount seperately mentioned in the invoice will preclude one from deducting tds on it.

@VaibhavJ

@VaibhavJ (Expert)

21 January 2014 Also in cir. no where mandated to have written agreement.

Thx

AVTAR SINGH

AVTAR SINGH (Expert)

26 January 2014 The terms of agreement can be oral. The circular only says about agreement and not 'Written Agreement'. The intention behind the circular is to deduct TDS on income if given separately in the invoice. Therefore the essential condition is that service tax should be indicated separately.

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