Tds deduction

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suchita

suchita (Querist)
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04 January 2012 should i deduct tds on rent including service tax+ educational cess tax + s& H Cess or excluding

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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04 January 2012 Service tax paid by the tenant does not 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.—Vide Circular No. 4/2008, dt. 28-4-2008.
The above circular answers your query
CA MANOJ GUPTA
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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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04 January 2012 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.

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