Tds u/s 194j deducted on income including service tax

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Dheeraj (Querist)

21 December 2018 Hi,
For F.Y 2016-17, I have billed a company (for consultancy) for 4Lacs/month + Service Tax and they have deducted TDS on total amount (Basic + Service tax). The TDS was deposited and return was filed.

I have filed return u/s 44ADA, wherein Gross Receipts were shown as 48,00,000/- which was inconsistent with the income appearing in Form 26AS ( as 26AS reflected the amount (basic+service Tax)

I have received a notice u/s 143(1)(a) as there was mismatch between the Gross Receipt shown in the return and income appearing in Form 26AS.

I have responded to this notice and explained that TDS has been deducted on Fee + Service Tax Amount due to which the Income Appearing in Form 26AS is higher than the actual receipt shown in the Income Tax Return.

On this, the I-T Department has responded that entire turnover appearing under the Form 26AS (i.e, inclusive of Service Tax) should be declared as turnover u/s 44ADA.

I am not satisfied with the response, as if I consider the response from IT Department, then my Gross Receipts exceeds the amount of Rs 50 Lakhs and I will not be able to file return u/s 44ADA. Also, TDS as wrongly deducted by the deductor and I have shown the correct turnover i.e, basic fee (exclusive of Service Tax)

Can someone suggest what should be done in this case.

Nikhil Kaushik

Nikhil Kaushik (Expert)

21 December 2018 unfortunately, you may not be on a very strong footing here. In several cases related to presumptive taxation, it has been held that service tax shall be included in the gross receipts.

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Nikhil Kaushik

Nikhil Kaushik (Expert)

21 December 2018 please go through this. https://taxguru.in/income-tax/service-tax-will-be-included-in-turnover-for-the-calculation-of-presumptive-profit.html?amp

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