Tds on rent paid by bpo

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Sushant Mahajan (Querist)
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07 October 2013 Is BPO (as a Business Service Centre) providing call center services exempt from deducting TDS under section 194-I?

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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08 October 2013 No it is not exempt.

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Sushant Mahajan

Sushant Mahajan (Querist)
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08 October 2013 Thank You sir

Ajay Mishra

Ajay Mishra (Expert)
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08 October 2013 ok......

Doubts had cropped up on whether TDS should be calculated on the gross rental, inclusive of service tax or on net rental, excluding the amount paid as service tax. The Central Board of Direct Taxes (CBDT) also got many representations in this regards, following which it has clarified the matter.
“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,” the CBDT has clarified. So TDS, under sections 194-I of the Income Tax Act, would be required to be made on the amount of rent paid without including the service tax, it further added. TDS is deducted on rentals which are over Rs 12,000 per month at the rate of 20% for companies and 10% for individuals.
The clarification would help a number of BPO and retail companies which work out of leased offices. Budget 2007-08 had introduced the proposal to levy service tax at the rate of 12.36% on rental of immovable property used for commercial purpose.

You can read the latest case on it:

Serco Bpo Pvt. Ltd.,, Gurgaon vs Department Of Income Tax on 7 December, 2012
https://indiankanoon.org/doc/125497022/

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Sushant Mahajan

Sushant Mahajan (Querist)
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08 October 2013 Thank you for the material sir.

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