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Sponsorship Services

This query is : Resolved 
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(Querist)
04 May 2009 As per Rule 2(1)(d), the receiver of sponsorship service is liable to pay service tax on the services received. Are they required to deduct the service tax amount from the amount payable.

For eg, A P Ltd has raised invoice on Shika, the service receiver for Rs. 2,00,000. Service tax is not charged as service provider is not liable to pay service tax.

Shika, instead of paying A P. Ltd (200000 less TDS applicable ), pays them (200000 Less TDS Less Service tax).

Is this correct? The payment of service tax is the liability and burden to be borne by service receiver.

In my view, Shika is not supposed to deduct service tax from the amount payable to A P. Ltd. Please comment whether my contension is correct or wrong
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Madhukar N Hiregange

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Madhukar N Hiregange (Expert)
06 May 2009 In my view the deduction of service tax by the service reciver may not be correct unless the contract itslef makes the same clear.
Under service tax there is no TDS concept upto now.
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