TDS, VAT DEDUCATION
This query is : Resolved
10 October 2008
Dear all,
one of my client is registered under MVAT and having the business of supplying surrvey instruments & civil engineering material, recently he has supplied survey instruments to Maharashtra State Govertnment(PWD)and has rasied the bill with vat @ 12.50% the office while paying him has deducted VAT @ 4%, TDS @ 5.25%, service Tax @ 12.36% and has paid the bill,
i.e. suppose the bill amount is Rs 1,000/- they have deducted Rs 40 as vat, Rs 52.50 as tds, & 123.60 as service tax.
now my query is under which section they have deducted this tax? can they deducted it? can we claim the VAT amount while filling the half yearly VAT return & under which section ?
yes we can claim the TDS amount while filling the ITR, and he is not registered under service tax so that amount cannot be claimed.
Please Guide me
hoping for a positve response form all
Thanks
Atul N.S.
one of my client is registered under MVAT and having the business of supplying surrvey instruments & civil engineering material, recently he has supplied survey instruments to Maharashtra State Govertnment(PWD)and has rasied the bill with vat @ 12.50% the office while paying him has deducted VAT @ 4%, TDS @ 5.25%, service Tax @ 12.36% and has paid the bill,
i.e. suppose the bill amount is Rs 1,000/- they have deducted Rs 40 as vat, Rs 52.50 as tds, & 123.60 as service tax.
now my query is under which section they have deducted this tax? can they deducted it? can we claim the VAT amount while filling the half yearly VAT return & under which section ?
yes we can claim the TDS amount while filling the ITR, and he is not registered under service tax so that amount cannot be claimed.
Please Guide me
hoping for a positve response form all
Thanks
Atul N.S.
10 October 2008
Mr. Atul,
It appears that your client is a seller and not a service provider, he is also not executing any works contract. I do not find any reason of deducting of TDS under IT Act on sales.
There is no any TDS clause under service tax act. You can ask for explanations and the reasons of such deductions, such types of unauthorised and unwarranted deduction should be discouraged.
It appears that your client is a seller and not a service provider, he is also not executing any works contract. I do not find any reason of deducting of TDS under IT Act on sales.
There is no any TDS clause under service tax act. You can ask for explanations and the reasons of such deductions, such types of unauthorised and unwarranted deduction should be discouraged.
10 October 2008
10 October 2008
02 August 2025
Sure! Let me break down the scenario and clarify the treatment of VAT, TDS, and Service Tax deductions in your client’s case:
---
### Scenario Recap:
* Client registered under **MVAT** (Maharashtra VAT), supplying **survey instruments & civil engineering materials**.
* Supplied survey instruments to **Maharashtra PWD (Government)**.
* Bill raised with VAT @ 12.5%.
* The paying office deducted:
* VAT @ 4%
* TDS @ 5.25%
* Service Tax @ 12.36%
* Example: For Rs. 1,000 bill:
* VAT deducted = Rs. 40
* TDS deducted = Rs. 52.50
* Service Tax deducted = Rs. 123.60
---
### 1. **VAT Deduction @ 4%**
* **Under which section is VAT deducted?**
* This is **TDS under VAT law**, specifically under **Section 31(2)** of the MVAT Act.
* Certain government departments and specified purchasers deduct VAT @ a notified rate on payments to dealers to ensure tax compliance.
* **Can they deduct VAT on your client’s payment?**
* Yes, government departments are authorized to deduct VAT at source if the dealer is registered under MVAT.
* Deduction is a form of advance tax collection and can be claimed back by the dealer while filing the **VAT return**.
* **Can VAT deducted @4% be claimed in VAT return?**
* Yes, the deducted VAT can be **claimed as input tax credit** or adjusted against VAT liability while filing VAT returns.
* The dealer should show the deducted amount as TDS VAT and claim credit in the relevant half-yearly return.
---
### 2. **TDS Deduction @ 5.25%**
* **What is this TDS?**
* This is likely **TDS under Income Tax Act**, probably under **Section 194C (Contract Payments) or Section 194J (Professional Fees)** depending on the nature of supply.
* Government bodies deduct TDS on payments made to contractors/suppliers.
* **Can they deduct TDS here?**
* Yes, TDS can be deducted by the paying department.
* **Can your client claim this TDS?**
* Yes, your client can claim this **TDS as tax credit while filing Income Tax Return (ITR)**.
* TDS certificates (Form 16A) must be collected and TDS should reflect in Form 26AS.
---
### 3. **Service Tax Deduction @ 12.36%**
* **Is this valid?**
* Normally, **service tax is not deducted by the purchaser** on payments to suppliers, unless it is a reverse charge mechanism where the recipient pays service tax.
* If your client is **not registered under Service Tax** and the supplier does not provide taxable services, **this deduction is not proper**.
* **Can your client claim this?**
* If service tax is wrongly deducted, client cannot claim it as input credit (not registered under service tax).
* Client should clarify with the payer and get this corrected.
---
### Summary Table
| Tax Type | Deduction Validity | Claim in Return | Section/Reference |
| ----------- | ---------------------------------- | -------------------------------------- | -------------------------- |
| VAT @ 4% | Yes, under MVAT Sec 31(2) | Yes, in VAT return | MVAT Act, Section 31(2) |
| TDS @ 5.25% | Yes, Income Tax TDS deduction | Yes, in Income Tax Return | Income Tax Act, Sec 194C/J |
| Service Tax | Not valid if client not registered | No (unless registered for Service Tax) | Service Tax Law (Check) |
---
### Recommendations:
* Claim **VAT TDS** in VAT return as credit.
* Claim **TDS on income tax** in ITR as credit.
* Clarify **service tax deduction** with payer as it may be wrong.
* Maintain proper certificates and documents for all deductions.
---
If you want, I can help draft a letter or email to clarify with the paying authority regarding the service tax deduction or guide on filing VAT returns with TDS credits. Let me know!
---
### Scenario Recap:
* Client registered under **MVAT** (Maharashtra VAT), supplying **survey instruments & civil engineering materials**.
* Supplied survey instruments to **Maharashtra PWD (Government)**.
* Bill raised with VAT @ 12.5%.
* The paying office deducted:
* VAT @ 4%
* TDS @ 5.25%
* Service Tax @ 12.36%
* Example: For Rs. 1,000 bill:
* VAT deducted = Rs. 40
* TDS deducted = Rs. 52.50
* Service Tax deducted = Rs. 123.60
---
### 1. **VAT Deduction @ 4%**
* **Under which section is VAT deducted?**
* This is **TDS under VAT law**, specifically under **Section 31(2)** of the MVAT Act.
* Certain government departments and specified purchasers deduct VAT @ a notified rate on payments to dealers to ensure tax compliance.
* **Can they deduct VAT on your client’s payment?**
* Yes, government departments are authorized to deduct VAT at source if the dealer is registered under MVAT.
* Deduction is a form of advance tax collection and can be claimed back by the dealer while filing the **VAT return**.
* **Can VAT deducted @4% be claimed in VAT return?**
* Yes, the deducted VAT can be **claimed as input tax credit** or adjusted against VAT liability while filing VAT returns.
* The dealer should show the deducted amount as TDS VAT and claim credit in the relevant half-yearly return.
---
### 2. **TDS Deduction @ 5.25%**
* **What is this TDS?**
* This is likely **TDS under Income Tax Act**, probably under **Section 194C (Contract Payments) or Section 194J (Professional Fees)** depending on the nature of supply.
* Government bodies deduct TDS on payments made to contractors/suppliers.
* **Can they deduct TDS here?**
* Yes, TDS can be deducted by the paying department.
* **Can your client claim this TDS?**
* Yes, your client can claim this **TDS as tax credit while filing Income Tax Return (ITR)**.
* TDS certificates (Form 16A) must be collected and TDS should reflect in Form 26AS.
---
### 3. **Service Tax Deduction @ 12.36%**
* **Is this valid?**
* Normally, **service tax is not deducted by the purchaser** on payments to suppliers, unless it is a reverse charge mechanism where the recipient pays service tax.
* If your client is **not registered under Service Tax** and the supplier does not provide taxable services, **this deduction is not proper**.
* **Can your client claim this?**
* If service tax is wrongly deducted, client cannot claim it as input credit (not registered under service tax).
* Client should clarify with the payer and get this corrected.
---
### Summary Table
| Tax Type | Deduction Validity | Claim in Return | Section/Reference |
| ----------- | ---------------------------------- | -------------------------------------- | -------------------------- |
| VAT @ 4% | Yes, under MVAT Sec 31(2) | Yes, in VAT return | MVAT Act, Section 31(2) |
| TDS @ 5.25% | Yes, Income Tax TDS deduction | Yes, in Income Tax Return | Income Tax Act, Sec 194C/J |
| Service Tax | Not valid if client not registered | No (unless registered for Service Tax) | Service Tax Law (Check) |
---
### Recommendations:
* Claim **VAT TDS** in VAT return as credit.
* Claim **TDS on income tax** in ITR as credit.
* Clarify **service tax deduction** with payer as it may be wrong.
* Maintain proper certificates and documents for all deductions.
---
If you want, I can help draft a letter or email to clarify with the paying authority regarding the service tax deduction or guide on filing VAT returns with TDS credits. Let me know!
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