Sitting fee of Rs.10000/- is to be paid to directors...
Sitting fee......................10000
Service tax.....................1236
Total..............................11236
TDS...............................1124
Balance Payment........10113
In this case service tax is to be paid by the company as reverse charge is applicable. Now my question is how much is to be paid to directors and how much service tax is to be paid to department 1236 or 1236-124=1112
Rs.8876 to director
Rs.1236 towards ST
Rs.1124 towards TDS
Total- Rs. 11236
This'll b the case except in case of Renting of Immovable Property
But in this case we are paying to director Rs.10000/- only and TDS is deductible on the amount payable so whether we are not supposed to pay to director Rs.9000(10000-1000) as service tax is payable to department by the company under reverse charge.
Here, we're paying Rs.1236 on behalf of the director (Since it's RCM)... So total amt payable is Rs.11236
As per Income Tax act , you are required to deduct TDS on the amount paid to the Professional/Director only.
As in this case You are paying him only amount of Rs. 10000/- and Rs. 1236/- to the department, you are required to deduct TDS on Rs. 10000/- only but not on the Entire 11236/- as Rs. 1236/- is the liabilty of the service receiver.
You are paying the Director Rs. 10000/-, this is taken as exclusive of service tax and hence amount of Rs. 1236/- is to be paid as service tax to the department and TDS has to be deducted on Rs. 10000/- only i.e, Rs. 1000/- has to be remitted to Income Tax Department.
I agree with Rahul.
When service Tax becomes liability on reverse charge basis, TDS is not deducted on that portion of service tax which is the liability of service receiver under reverse charge. So Please note the followings -
1) Service Tax on Reverse charge to be paid to Govt. Rs.1236/-
2) TDS to be deducted Rs.1000/- and deposited to Govt.
3) Director should be paid Rs.9000/- (i.e. 10000-1000).
I think you can clearly understand by this journal entry
Expense A/c Dr 10000
Service Tax Deferred Input A/c Dr 1236
To Director A/c ( Bal. figure) 8876
To TDS Payable A/c (10% incl. of ser. tax) 1124
To Service Tax payble - Reverse Charge 1236
Ajit, when you are deducting tax at source it should be inclusive of Service Tax (except for Sec. 194I)
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