30 May 2012
Dear Sir, I have the following query relating to TDS.
Consider a Bill drawm on a client for Audit Work.
PROFESSIONAL CHARGES : Rs.10,000 Service Tax @ 12.36% : Rs. 1,236
Total Bill Amount : Rs. 11,236
Q.1 > When Client makes payment to us. He should deduct TDS @ 10% on Rs.10,000 i.e. the professional Charges or Total of 11,236 ? Q.2 > If TDS to be deducted on 11,236 what is the logic behind it as Service Tax is an indirect tax and we are quarterly paying service tax collected to the Govt. So why Deduct TDS on the amount including Service tax.
30 May 2012
TDS will be deducted on Rs. 11,236. This is so because Section 194J uses the words "any amount paid". Any amount includes service tax.
Compare this with Section 194I which uses the words "income". Service tax is not the income of the recipient and accordingly u/s 194I, TDS is deducted on the amount excluding service tax.
CAclubindia
