TDS on Serivce Tax

TDS to be deducted on Gross Value (ie including Service Tax)

[color=purple]My dear friend,

                    Service Tax is not Income of professional. Hence u should not make TDS on service Tax. The TDS is only on the professional fee and not on the Service Tax which is payable by the professional to the Excise department.

Bye

Y S RAO[/color]

TDS has to be deducted on the gross billing amount.

I have worked for a Service industry. If only one invoice is raised for al srvices provided i.e exempt & those covered under service tax we had to pay service tax on the whole amount.
the payments recieved were after deducting tds  on the invoice amt ie gross including service tax.
There is acircular issued by the dewpt on this matter.

hey ravi can u let me know the circular no ...kindly mail me if possible at mohan.dagha21 @ gmail.com


Thanks

The One Says:

The logic behind charging Tax on Gross Amount does not inspire The One. The One feels it defeats sanity.However it seems this is what The Revenue wants:

[quote]The tax is required to be deducted at source on the gross amount of bill which is inclusive of service tax as per the clarification issued by the Department. CBDT in circular no. 715 has clarified that Section 194 C and 194 J refer to "any sum paid" and obviously reimbursement cannot be deducted out of bill amount for the purpose of TDS. Therefore, considering the above circular and the amount to be debited in books as expenditure, the tax has to be deducted on the entire amount of bill inclusive of service tax.[/quote]

Dear All,
If TDS has to be deducted on Service tax then as per the rules laid down in the SERvice tax under finance act 1994, wherein SErvice tax can is payable to department on receipt basis and if TDS is deducted on Service tax that means less receipt of Income & service tax and hence to be remitted shrotly... Pls clarify and also note that the Sec. 194 C says TDS to be deducted on the income comprised therein...

Friendly
Keep Smiling
Sunil D
SD..

Hi dear,
The correct answers of your queries are as under:-

CBDT vide circular no. 715 has clarified that Section 194 C and 194 J refer to "any sum paid" ,hence tax has to be deducted on the entire amount of bill inclusive of service tax.

bye,

Ravi Teltia

Dear Mr. Teltia

The clarfication with regards to 'Any sum' mentioned in the cicular 715 is with regards to expense reimbursement and not Taxes..

The logic what i can think is since in the expendiutre claimed may be sometimes more than the actual incurred and thereby other small income can be made in the contracts and hence such sum has been considered as any sum..

Also, if we go by your view then do i have to pay service tax less or do i have to pay entire amount.

Also, note there's a buzz going around that in the current budget the Scheme of TDS shall be brought in for Service Tax thereby making the sErvice receiver to know all the provisions and if follow the same stand then TDS on Service tax will bemade twice once under ST and then under IT.....

Also, wht is to be noted is TDS is made on income and not taxes...


Sunil D

TDS on Gross value only. Recent CBDT Circular says that.

TDS is not to be done from service tax. A case in point is the audit fees paid by the Banks towards Branch Audit fees. Service tax is fully paid and TDS is made on the fees only.
Carao

The One Says:

This is a contentious issue and different professionals have different views (as can be seen from the above discussion there is not definitive answer) but, as I have stated earlier left to pure logic I would deduct TDS on amount excluding service tax. Service tax is on gross value of service rendered and TDS on the income of the person both are separate and need not be bundled together. Circular No. 715 which I have posted earlier takes a different view.

Hi this is amit here TDS has to be deducted on gross amount as per circular issued by it department no 715 year 1995 pls find the same on www.incometaxindia .gov.in

Hi,

It makes logical sense that tax is to be deducted only on income and not on tax collected under law as a collector on behalf of the revenue. However, CBDT has, whether it is sane or not, clarified that TDS is to be deducted on the gross bill amount. An interesting thing to notice is the clarification given by CBDT with respect to TDS on rent where it is mentioned specifically that the landlord collects the service tax on behalf of the revenue and does not earn any income out of the same and hence TDS need to be deducted only on the rental component. It goes beyond understanding as to why then in all other cases the same yardstick is not applied. The reality is that we need to deduct TDS on the invoice value including service tax.

Hey i m doing audit of a govt co and at head office they are deduting TDS on amount excluding service tax

and when i told them they are wrong they want the circular behind the logic of deduting tax over tax.

How do i prove them,they are saying that none of the auditor has yet been pointed this point not C& AG not even Tax Auditor

and the circular you are mentioning has nowhere specifically cleared that tds has to be deduct also on service tax