Tds on service tax

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This query is : Resolved

CA Nikhil Jhanwar (Querist)

13 February 2012 Whether TDS will be deducted on service tax amount. As Per Circular 4/2008 TDS will not be deductible under Section 194I in respect of rent on service tax portion. Further as per Circular dt. 30.06.2008 Circular 4/2008 is specific one and cannot be applied to Section 194C & 194J

Now In case of import of service and reverse charge mechanism where service receiver will pay service tax and therefore, service tax will not be charged in Invoice. So in that case what will happen?

PAWAN KUMAR

PAWAN KUMAR (Expert)

13 February 2012 TDS will not liable for payments to foreign service providers for which service tax on reverse charge method is paid.

VIKAS KUNDU

VIKAS KUNDU (Expert)

14 February 2012 Under sec. 194C & 194J TDS is deducted at the rate applicable to that section on the gross amount paid to contractee or professional as the case may be. in case of reverse charge service tax is paid to the CG not to the payee. Mean gross amount which is paid or payable to the payee(excluding service tax amount). And TDS is deductible only the amount paid to non resident. Hope the above is suffice....

CA Nikhil Jhanwar

CA Nikhil Jhanwar (Querist)

14 February 2012 Thanks for your advice

It is something discriminatory that in one case TDS is levied on service tax and in other case not resulting into cascading effect of taxation. There should be some uniformity in provisions. Service tax is not part of income, it is tax payable to the government, no TDS should be deducted on it technically beside legal position

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