TDS deduction

This query is : Resolved

Chandru (Querist)
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07 April 2010 Dear Sir/madam

This is chandrsekaran, i have doubt in tds deduction

I received an invoice from my creditor

Total invoice value isRs. 22060/-

Service sales 20000/-
Service Tax 10.3% 2060/-

Total 22060/-

in this what amount i need to deduct the TDS, ie Servie sales value 20000/- or fully invoice value of Rs 22060/-

pls guide me and let me know is there any notification

Regards
Chandrasekaran,

CA Kapil B Gupta

CA Kapil B Gupta (Expert)
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07 April 2010 Full Invoice Value (INR 22,060.00)

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 April 2010 IF YOU ARE BOOKING FULL AMOUNT AS EXP THEN DEDUCT TDS ON ENTIRE AMOUNT. IF YOU ARE BOOKING ONLY RS.20000/- ND TAKING INPUT CREDIT OF SERVICE TAX THEN DEDUCT TDS ON RS 20000/- ONLY.

CA Ashok Kumar Sahu

CA Ashok Kumar Sahu (Expert)
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07 April 2010 AGREE WITH SANJAYJI

Chandru

Chandru (Querist)
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07 April 2010 thanks sir, pls let me kknow is there any govt notification

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Hi Chandrasekaran,

Regarding TDS deduction on invoices including service tax, the general practice and legal position is:

* **TDS should be deducted only on the service charge portion (excluding service tax)**, i.e., on **₹20,000** in your example, **not on the total invoice amount ₹22,060**.

### Why?

TDS is deducted on the **income portion** payable to the service provider, and **service tax collected is not income of the service provider but a liability they pass to the government**. So it is excluded from the TDS base.

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### Legal backing:

* **CBDT Circular No. 715 dated 16-10-1994** clarifies that tax is to be deducted on the amount payable to the service provider exclusive of service tax.
* Also, **Section 194J(1)** (for professional fees etc.) and **Section 194C(1)** (for contracts) specify TDS on "sum credited or paid" for services, which excludes taxes collected on behalf of government.

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### Summary for you:

| Invoice Component | TDS Deductible Amount |
| ------------------- | ------------------------------- |
| Service Sales | ₹20,000 |
| Service Tax (10.3%) | ₹2,060 (excluded from TDS base) |
| Total Invoice | ₹22,060 |

**TDS will be deducted on ₹20,000 only.**

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If you want, I can provide a link to the official CBDT circular or relevant notifications. Would you like that?

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