TDS on service tax on rent

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sreenivas (Querist)
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06 March 2008 hi sir,

we have paid office rent with service tax and TDS deducted from both Rent and service tax together.but landlord asked payment without deducting TDS on service tax.is it possible as per law or not.

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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06 March 2008 The TDS should not be deducted on the service tax because the service tax is not the rent part of landlord and it violates the TDS law. The TDS law states that amount on which TDS is deduted should be shown in Profit and loss Account. But as service tax is not the income of the landlord, he will not show that as income. The service tax will be deposited to the government. As such it makes no sense to deduct TDS on service tax. However, the IT dept is still to clarify the issues defined in circular No.715 dated 1995.
However, if TDS has been deducted on the service tax, then the accounting entry would be
a) Credit Service tax as income
b) Show service tax paid or payable as expenditure and as liability.
This will cover the law of TDS as well.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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06 March 2008 Yes while logically What Mr. Gopal says is correct, The interpretation by department is inclusive of ST.

CA. Kirti S. Ganatra

CA. Kirti S. Ganatra (Expert)
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06 March 2008 No as per circular of department we have to deduct on TDS on amount inclusive of Service Tax

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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06 March 2008 I agree Mr Kirti but logically dificult to swallow.

CA vikash Jain

CA vikash Jain (Expert)
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06 March 2008 i too agree with kirti

CA J M Pattanayak

CA J M Pattanayak (Expert)
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07 March 2008 S. Thats correct. TDS should be deducted on Rent and Service Tax too.

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