TDS on professional services u/s 194j

on Rs.110300 i.e. including service tax amount.

It is only in the case of Rent where tds is to be deducted on the amount excluding service tax.

It will be on 1,10,300 and not on 1,oo,ooo.

dear rahul,

in your current case tha TDS will be calculated on the thr Amt of 1,11,300.00 only in case of rent it will be on amt excluding service tax

Thanks to all for clarifying me

@ roopak thanks for giving the clear - cut solution

Except section 194I, TDS on Rent , TDS is deducted inclusive of service tax.

     RULE :-               TDS IS TO BE DEDUCTED ON WHOLE AMOUNT,INCLUDING AMOUNT OF SERVICE TAX...ie..110300

EXCEPTION, RENT OF HOUSE PROPERTY..

tds is to be deducted on total amt ie inclusive of service tax (110300) however in case of rent it is to be charged on excluding service tax.

Dear Rahul,

I agree with your view that TDS should be deducted only on the amount of fees and not on the Service Tax billed.

Section 194J reads as follows:

"194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—

             (a)   fees for professional services, or

             (b)   fees for technical services, ⁵³[or]

        ⁵³[(c) royalty, or

             (d) any sum referred to in clause (va) of section 28,]

shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ⁵⁴[ten] per cent of such sum as income-tax on income comprised therein :"

This is followed by provisos.

I am of the opinion that Service Tax is neither "Fees" for professional services nor is it "Fees" for technicical services. Further, Service Tax is niether royalty nor does it attract the provisions of Sec. 28 (va). Hence there is no liability on any assessee to deduct TDS on the Service Tax amount.

I have been following this for a number of years without any problems.

Hope this helps.

on 111300 only in case of 194i rent ST is not comsidered

I am in agreement with the views expressed by CA M. Lapsiwala. In my previous organisation i also used to follow the practice of not deducting the TDS on service tax payable to the professionals.

But the fact is in general very few follow this practice and charge the TDS on amount including ST. The payees also accept the same as they get the deduction certificate from the payer.

In fact the IT department should have come with the clarification on this issue as it is a classic case of cascading effect of taxation rules.

Hi,

It should be calculated on 110300.00, because as per IT Act only for tds on rent (194I) is calculated  on the amount excluding service tax.So you need to calculate tds on professional charges(194J) on  amount 110300

TDs Shold dededuct on full amount, ie, Rs.110300

First of all the second para you wrote that tds will be deducted on rent including service tax is not correct tds will be deducted on Rent crossing threhold limit of 180000/- excluding Service tax @ 10%.

In the case of 94J TDS Will be deducted on Bill amount including Service Tax.