Tds on taxable amount under rcm service tax

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Jigar Soni (Querist)
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19 September 2014 My query is that we have manpower contractor & he charges service tax in the bill. Under Service Tax Reverse Charge Mechanism the service recipient has to pay 75% of Service Tax applicable. Therefore If basic bill amount is 100 then TDS is applicable on 100 + (75% Service Tax)i.e. 9.27 = 109.27 or 100 + 12.36% = 112.36 ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 September 2014 TDS is applicable on 100 only. No TDS on service tax.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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19 September 2014 TDS to be deducted on amount excluding service tax for all sections. The CBDT has issued Circular No. 1/2014 dated 13.01.2014 pointing out that the Rajasthan High Court has taken the view in CIT(TDS) vs. Rajashthan Urban Infrastructure that if as per the terms of the agreement between the payer and the payee, the amount of service-tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service-tax component u/s 194J of the Act. Pursuant thereto, the CBDT has decided in exercise of powers u/s 119 that wherever the terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component. Complete notification may be seen from below link--
https://law.incometaxindia.gov.in/DIT/Circulars.aspx

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