Reverse charge entry and utilisation of service tax

TDS will be deducted on whole amount inclusive of ST as under RCM the Service Receiver is just meeting the liability of Provider & is availing credit for the same.

So, as earlier, TDS has to be deducted on total payable amount i.e. 28090/-

Regards

aishwarya is right

legal fees dr                                                      25000

       to lawyer a/c                                                                          22500

       to t.d.s a/c                                                                                 2500

sevice tax under reverse charge dr               3090

         to bank /cash                                                                           3090

This is an Legal Fees 100% service tax liability falls on us.

Ankit Can you clarify what Aiswaray asked you...

This is an already resolved query . .go to /experts/tds-on-service-tax-962220.asp#.UVBghxykxCA for details.

You can also check out this link https://taxaccountvatca.blogspot.in/2012/01/tds-on-service-tax-value-or-excluding.html for accurate references.

why to deduct tds on amout including service tax . Service tax liability is of Service reciver under reversal charge. So service tax is directly deposit to Govt account. And Tds is not to deducted on service tax .

Please refer the judgment of the Hon’ble Rajasthan High Court, in the case of:

Commissioner of Income Tax (TDS), Jaipur Vs.  M/s. Rajasthan Urban Infrastructure [2013 (8) TMI 12 – RAJASTHAN HIGH COURT] on following issue:

Issue:

Whether   TDS is to be deducted on the amount of Service Tax charged on professional/ technical fees under Section 194J of the Income Tax Act, 1961?

Facts & Background:

M/s Rajasthan Urban Infrastructure Development Project (“the Respondent or the RUIDP or the assessee”) is a project of Government of Rajasthan for the Infrastructure Development and Civic Amenities in the specified areas/ cities   in the state of Rajasthan.  The  RUIDP  appoints the technical and project consultants and deducts income tax at source from the amount of  fee payable as  per   the agreement and deposit the same as  per   the  relevant provisions of  the Income Tax Act, 1961  (“the  Income  Tax  Act”) and subsequently  files  the return for  the same within  due time.

The Assessing Officer, vide its order dated 30.01.2009 raised a demand of Rs. 1,70,881/- along with  interest thereon amounting to Rs. 44,776/-, on account of TDS on the amount paid   as Service Tax pertaining to Financial Year 2005-06. The  assessee preferred an  appeal before the Commissioner  of  Income  Tax  (Appeals),   Jaipur  which  was  allowed. Being  aggrieved with  the same,  the Revenue  filed  an  appeal  before the Income  Tax  Appellate Tribunal, Jaipur  but the same was  dismissed. Hence the revenue preferred an appeal before the Hon’ble Rajasthan High Court.

 Held:

It was  held   by  the Hon’ble Rajasthan High  Court that if Service  tax  is  payable  in addition  to professional/  technical   fees under  the  contract,   the  withholding  tax  will be  restricted  to  the professional fees. Hence, examination of contract terms is imperative

 The Hon’ble Rajasthan High Court held that the words “any sum paid” used inSection 194J of the Income Tax Act, 1961, relate to “fees for professional services or fees for technical services”. In terms of the agreement, the amount of Service Tax was to be paid separately and was not included in the fees. Hence the orders passed by  Appellate Authority as  well as  the Appellate  Tribunal  are  in accordance with the provisions of Section 194J of the Income Tax Act, 1961.

1]Prof services a/c dr 25000

To Lowyer's a/c                         22500.00

To TDS a/c ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,2500.00

2]Input service tax under RCM a/c  dr 3090

To, Servce tax payable                               3090

3] Service tax payable a/c              dr 3090

To, Cash/Bank                                            3090

Thanks, Language of the Hon’ble Rajasthan High Court is praiseworth. I am very much satisfied.