TDS Computation on Invoice with ST

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A Noble Student (Querist)
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29 November 2010 Dear Friends,

Can any one clarify on the Computation of TDS on invoices having ST component too.
Eg.Say Invoice value is Rs.100+10.3 ST,Total 110.3,TDS on the same as to me would be applied only on the Invoice Value say Rs.100.However we are informed by the authorities to compute TDS on the Total value inclusive of ST.i.e,TDS as Rs.11.3 as against Rs.10
Kindly Clarify me and also provide is the any such notification of compute TDS on (Inv+ST value)

Regards,
Bharath

AMAN Gupta

AMAN Gupta (Expert)
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30 November 2010 In the above example, TDS should be deducted on 110.3 . There is no specific notification in my knowledge right now. But, there was a circular from CBDT that the TDS u/s 194-I i.e. on rent payment should be deducted on amount(excluding ST).

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S SRINIVASAN

S SRINIVASAN (Expert)
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01 December 2010 Baring Section 194-I, in all other cases tds to be cut on Invoice plus st value. Refer circular of CBDT 4/2008 dated 28-03-2008 which is pasted under
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 doesn’t 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.

[F.No.275/73/2007-IT(B)]

AMAN Gupta

AMAN Gupta (Expert)
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01 December 2010 that circular is for 194I only. it does not tell about other sections

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