TDS on service tax

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This query is : Resolved

sanathkumar (Querist)

07 August 2007 While making payment U/S 194C(contracts)
Whether TDS to be made inclusive of service tax.
Sec 194C says TDS to be made on either the amt credited or paid which ever is earlier.

CA Mani

CA Mani (Expert)

08 August 2007 In general,

All the payers deducts TDS on total invoice value (i.e. including service tax).

Sanjeev Kumar Varshney

Sanjeev Kumar Varshney (Expert)

08 August 2007 There is difference of opinion on this issue but for saferside it is always better to deduct tax on total invoice value instaed of before Service Tax. Some are of the view that Service Tax is not an expenditure as it is charged by service provider and deposit to Govt.

shipra walia

shipra walia (Expert)

08 August 2007 the notification of service tax has cleared it that for the expenses u/s 194C and J tds will be deductd inclusive of service tax as they consider gross amount paid.

Now the same view is inserte in the Finance Act 1994(amended).

Can check the service tax chargeability section for this

CA. Hitesh Aggarwal

CA. Hitesh Aggarwal (Expert)

08 August 2007 Tds will be deducted on gross amount i.e inclusive of service tax.

D.C AHUJA

D.C AHUJA (Expert)

08 August 2007 I NOT AGREE WITH VIEW.TDS IS TO BE DEDUCTED ON NETT VALUE OF THE CONTRACT
SUPPOSE WORK DONE 100000 TDS 10.24 % 1024
PAYMENT 100000
SERVICE TAX 12.36 @ 1236
SERVICE TAX AS WHOLE IS TO BE DEPOSITED IN GOVT ACCOUNT AND THIS AMOUNT HAS NO CONNECTION TO GET DEDUCTION.

Abhisek Konar

Abhisek Konar (Expert)

10 August 2007 this is a debatable issue which has been discussed over here on various occassions.
i personally feel that tax is to be deducted on the net amount but to be on a safer side its better to deduct tax on the gross amount.