TDS is to be deducted from the income of the recipient.Service tax is not an income of the service provider as the service provider would be collecting service tax from the service receiver and depositing this amount with the govt. So, the service tax
collected is not an income of the service provider and the service provider is merely acting as an agent of the Govt.
So, the logically TDS should not be deducted from the amount inclusive of service tax and should be deducted from the amount exclusive of service tax
And the Govt in its Circular No. 1/2014 dated 13th Jan 2014 has also said the same. According to the latest circular issued by the Govt in this regard, TDS is to be deducted on the amount exclusive of service tax if the service tax amount is shown separately. As in most of the cases, Service Tax Amount is disclosed separately in the Invoice, TDS in all such cases would be deducted on the amount exclusive of service tax.
If the payment that is being made to the contractor does not exceed Rs. 30,000, No TDS on payment to contractor is required to be deducted. However, if the total of all such payments made or to be made during a financial year exceeds Rs. 75,000; TDS shall be deducted under Section 194C
Agree with Mr. Raghavendra
Thanks sir,
As per your opinion,
"If the payment that is being made to the contractor does not exceed Rs. 30,000, No TDS on payment to contractor is required to be deducted. " Now que is whether 30,000/- is exclusive or inclusive service tax?
Thanks sir,
As per your opinion,
"If the payment that is being made to the contractor does not exceed Rs. 30,000, No TDS on payment to contractor is required to be deducted. " Now que is whether 30,000/- is exclusive or inclusive service tax?
As Mr Raghavendra clearly clarified Exclusive of Service Tax
Exclusive of Service Tax
Cut off amount :If the credit or the payment in pursuance of the contract does not exceed Rs.30,000/-, no deduction has to be made at source. However , if the aggregate of all amounts paid/credited or likely to be paid/credited exceeds Rs. 75,000/- then tax at source is to be deducted.
HERE SHOWS THE CREDIT OR THE PAYMENT AMOUNT. Hence we have to pay amount inclusive of service tax. Is it ok?
sir, i know its exclusive service tax . i agrred with you. but still i am confuse for cut off limit. for calculating cut off limit, whether inclusive or exculsive consider?
i think people are not understanding the question properly...
@ mansi is not talking about the calculation of tax deduction, the question is about whether u consider service tax while checking the limit for deduction of tax (30000,75000)
i think that the words "payment" or "credit" to contractor means the agregate value of payment to be made...i think it should include Service tax as it is the part of contractor's Invoice...and its safe too...as the ambit of compliance increases.
hi there, as far as my thinking is concerned the agreegate amount of 30000 or 75000 here means exclusive of service tax as the provisions of TDS doesnt cover the portion of service tax then how the clouse of 30000 or 75000 would include the portion of service tax. please correct if i am wrong coz the same was the issue in one of scruitiny case i handled but my point was accepted by JCIT in that concerned case.
Service tax is not included in calculation of TDS because "service tax" is not the income of the service provider ( as he will deposit the same)..
The words in the provision is not "total income" should be lower than rs 30000...its "payment"
when u pay a contractor, u also pay service tax...
thats my argument...but ur makes sense too..there should be a better explanation somewhere on the internet.
u hv to take the amount before service tax.since the amount is lessthan 30000 no tds is applicable
See, it is a small amount, and there's no point getting into hassless for petty issues. It is advisable that you deduct TDS on amount excl. of service tax. Assessing Audthotiry may/ may not agree to exclusion of Service Tax for computation of cut-off limit.
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