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Service tax & TDS on Sharing of costs

15 February 2008

In X Group of companies, there are three companies. In one co.A of the said group, there is one employee who is IT/EDP Manager. This employee look after the IT needs of all three companies. His salary cost is shared by other two companies also in a pre agreed ratio.They have a MOU for this purpose and also for sharing other common costs like travel, conveyance etc. Is service tax applicable on Debit notes raised by Co. A on other two companies for such sharing ? Is TDS also applicable on this ??

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2 Replies

MANISH PANCHAL (service) (174 Points)
Replied 22 February 2008

as there is MOU for cost sharing i.e contract for cost sharing so tds to be deducted as per contract rate regarding debit not for cost sharing there is two seperate entity of which one of them providing service to other so service tax applicable on debit not issued

Dilip Darji (392 Points)
Replied 22 February 2008

If it is a company, why Invoice is not raised and debit note is raised. Since Company a id providing Service of IT to rest of the two companies and there is MOU between these three group companies, Service Tax is certainly payable.