Tds
This query is : Resolved
11 August 2011
Hi..
Just wanted to know the tds deduction should be on gross amount excluding service tax or on total bill amount including service tax
Also provide me circular details pertains to this issue.
And provions for the same in case of rent payments
Please revert
Thanks,
Prashant
Just wanted to know the tds deduction should be on gross amount excluding service tax or on total bill amount including service tax
Also provide me circular details pertains to this issue.
And provions for the same in case of rent payments
Please revert
Thanks,
Prashant
11 August 2011
In case of rent , TDS is required to be deducted on the income paid. Go through Section 194I, it has been clearly mentioned.
So on Service Tax TDS is not required to be deducted.
Department has already clarified the issue.
I may give it , later in a day or two.
So on Service Tax TDS is not required to be deducted.
Department has already clarified the issue.
I may give it , later in a day or two.
11 August 2011
As per Circular No.4/2008 dated 28.4.2008, it was clarified that TDS on rental payments would be required to be made only on the basic rental amount without including service tax. In other words, TDS should not be made on the service tax portion of the rent. However, this analogy is not applicable to TDS under other sections.
In short--
For 194I - Deduct TDS on amount excluding service tax.
For other section - Deduct TDS on amount including service tax.
In short--
For 194I - Deduct TDS on amount excluding service tax.
For other section - Deduct TDS on amount including service tax.
11 August 2011
CIRCULAR NO. 4/2008, DATED 28/4/2008
Clarification on deduction of tax at source (TDS) on service tax component on rental income under section 194-I of the Income-tax Act
CIRCULAR NO. 4/2008, DATED 28-4-2008
Representations/letters have been received in the Board seeking clarification as to whether TDS provisions under section 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).
2. 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. Further rent has been defined in 194-I as
rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,-
(a) land; or
(b) building (including factory building); or
(c) land appurtenant to a building (including factory building); or
(d) machinery; or
(e) plant; or
(f) equipment; or
(g) furniture; or
(h) fittings,
whether or not any or all of the above are owned by the payee;
3. 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 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.
4. These instructions may be brought to the notice of all officers working in your region for strict compliance.
5. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties.
Clarification on deduction of tax at source (TDS) on service tax component on rental income under section 194-I of the Income-tax Act
CIRCULAR NO. 4/2008, DATED 28-4-2008
Representations/letters have been received in the Board seeking clarification as to whether TDS provisions under section 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).
2. 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. Further rent has been defined in 194-I as
rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,-
(a) land; or
(b) building (including factory building); or
(c) land appurtenant to a building (including factory building); or
(d) machinery; or
(e) plant; or
(f) equipment; or
(g) furniture; or
(h) fittings,
whether or not any or all of the above are owned by the payee;
3. 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 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.
4. These instructions may be brought to the notice of all officers working in your region for strict compliance.
5. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties.
11 August 2011
Service Tax component to be considered for deducting tax on any sum paid as professional and technical fees under section 194J
The Central Board of Direct Taxes (CBDT) has clarified that the payments made under section 194I differ significantly from payments made under section 194J in the way that in the case of 194I, TDS has to be deducted on any income paid as rent. However, in the case of section 194J TDS has to be deducted on any sum paid as professional and technical fees. The CBDT had decided to exclude TDS on service tax component on rental payment because it was construed that service tax payment cannot be regarded as income of the landlord. Since section 194J covers any sum paid, therefore the CBDT has decided not to extend the scope of Circular No. 4/2008 dated 28 April 2008, to such payment under section 194J.
Note: Circular No. 4/2008, dated 28 April 2008 states that service tax paid by the tenant is not in the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, TDS under sections 194I of the Act would be required to be made on the amount of rent paid/payable without including the service tax.
Circular No. F. No.275/73/2007-IT(B) by Ministry of Finance dated 30 June 2008
The Central Board of Direct Taxes (CBDT) has clarified that the payments made under section 194I differ significantly from payments made under section 194J in the way that in the case of 194I, TDS has to be deducted on any income paid as rent. However, in the case of section 194J TDS has to be deducted on any sum paid as professional and technical fees. The CBDT had decided to exclude TDS on service tax component on rental payment because it was construed that service tax payment cannot be regarded as income of the landlord. Since section 194J covers any sum paid, therefore the CBDT has decided not to extend the scope of Circular No. 4/2008 dated 28 April 2008, to such payment under section 194J.
Note: Circular No. 4/2008, dated 28 April 2008 states that service tax paid by the tenant is not in the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, TDS under sections 194I of the Act would be required to be made on the amount of rent paid/payable without including the service tax.
Circular No. F. No.275/73/2007-IT(B) by Ministry of Finance dated 30 June 2008
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