TDS to be deducted on amount including service tax

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Mandar

Mandar (Querist)

12 July 2007 Whether TDS to be deducted on amount including or excluding service tax.

SUBRAMANIA SARMA G

SUBRAMANIA SARMA G (Expert)

12 July 2007 What is paid to the service provider is the amount that is charged to the books and as such tax is to be deducted on the full amount including service tax

Monark

Monark (Expert)

12 July 2007 Refering to the words of the act I also have a similar opinion as it says "the amount of credit or payment..." it is safe to deduct on the whole amount inclusive of service tax though is not not apposite to do so but in absence of any clarifications in that regards it is safe to deduct TDS on the whole amount.

Abhisek Konar

Abhisek Konar (Expert)

13 July 2007 in case of 194J and 194I tax is to be deducted on fees and rent respectively and service tax dont form a part of either and so tax is not to be deducted on such service tax

the controversy arrises in case of 194C as per which tax is to be deducted on payment which includes service tax.

many beleives that such payment stated is only wrt the work in persuance of a contract and such payment excludes service tax.this also seems logical as such is applicable in case of 194J,I and there is no sense of deducting tax on another tax as the objective is to deduct tax on income.

but as stated by the expert above, in case of such controversy its better to deduct tax on service tax as problem will arrise only in case of less deductions.so why take a risk.

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