Reverse charge urgent

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

Dear Sandeep, You can not deduct TDS on Service Tax Portion as this is not being paid to Director. So correct entry would be as follows - Expense A/c Dr 10000 Service Tax Deferred Input A/c Dr 1236 To Director A/c ( Bal. figure) 9000 To TDS Payable A/c (10% incl. of ser. tax) 1000 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)