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Tds on service tax

RAHUL (Service) (116 Points)

30 July 2012

Hi every one,

From 01-07.2012 , the is notification of service tax on reverse chagrge mechanism , in the said notification whateever service tax liablity of legal advocates ,in case of vechile hire chagres and in case of works contract tax,the service tax has to be borne by the company.In this case whether we should deduct the TDS on full amount including service tax or only on amount excluding service tax.

E.g

Legal Bill 100.00

Add Service tax @ 12.36 % 12.36

Total Expenses Booked 112.36

TDS should be deduted on 112.36 or 100 ?

Please clarify

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14 Replies

neeraj (CA) (930 Points)
Replied 30 July 2012

Tds should be deducted on 112.36 however u/s 194-I i.e. in case of rent Tds has to be deducted on net amt. i.e. exclusive of service tax

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 30 July 2012

TDS to be Deducted on Full Amount i.e. 112.36/- Including Service Tax.

Only U/s 194I Rent, No Need to Deduct TDS on Service Tax Portion.since There is One Notification for This Special Issue.

(Guest)

HI..

The TDS is to be deducted on full invoice amount. For this the following entry can be done.

Particular	Dr	Cr
Expenses	112.36
S.Crs		88.76
S.Tax		12.36
TDS @ 10%		11.24
Total	112.36	112.36

Regards

Anand.

DHARMENDRA SHARMA (Senior staff) (444 Points)
Replied 30 July 2012

CBDT had issued a circular vide circular No.04/2008 dated 28/04/2008.As per that circular,a person paying amount to a person for rent will not deduct tax on service tax.But if the payment is for professional or technical fees,the TDS is deducted on the amount includible service tax.

1 Like

Ravi Shankar Dubey (zindagi ek sangharsh) (100 Points)
Replied 31 July 2012

TDS DEDUCTED ON FULL INVOICE AMOUNT RS. 112.36

V.D.KRISHNA PRASAD (Private Employee) (183 Points)
Replied 31 July 2012

I agree with Ayush Agarwal

Sivaram.B (student) (37 Points)
Replied 31 July 2012

Shubham Agarwal (Article Assistant) (135 Points)
Replied 31 July 2012

TDS Should be deducted on Full amount i.e. Bill + Service Tax @ 12.36%, except only in one Case i.e On Rent, in Case of Rent TDS Should be Deducted on Bill exclusive of Service Tax.

Jignesh (Parnter) (21 Points)
Replied 31 July 2012

Tax should be deducted on Rs 100 only. Only if service tax is billed by service provider in the bill, tds should be deducted on service tax.

CA Ganesh Karthik (Chartered Accountant) (368 Points)
Replied 02 August 2012

Reproducing the wordings of the provisions. Hope this clarifies your doubts.

194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor 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

(i) one per cent. where the payment is being made or credit is being given to an individual or a Hindu undivided family.................

So in my view, TDS is to be deducted on the amount payable to the contractor. The amount payable to the contractor is not inclusive of service tax. Hence, TDS is to be deducted only on the gross amount, i.e. Rs. 100/-

Others may please comment.

Kannan Iyappan (Company Secretary) (1496 Points)
Replied 02 August 2012

Yes I do agree after 01.07.2012 in the given case, TDS on billed / credited amount only i.e Rs.100.

Thanks

(Guest)

Hi Ganesh Karthik,

In the above case service tax liability to goverment is not new. Instead of service provider the service receiver is paying it. So the bill is about the service then tax is to be deduct on total amount. Only the service tax purpose we cannot say TDS should not be deduct.

Lets take a case where service provider not charging service tax to service reciever because his gross annual turnover below the prescribed limit ( i.e 10,00,000). Then tell me service reciever whether to deduct tax or not..?

CA Ganesh Karthik (Chartered Accountant) (368 Points)
Replied 03 August 2012

Sir,

Going by your own reply to this post in earlier, agreed that TDS has to be deducted on the entire invoice value including service tax if such service tax is included on the face of the invoice.

But in case of reverse charge mechanism, Service Tax is not at all charged on the face of the invoice. It is directly paid by the service receiver.

Hence, I still stand by my view that, in such case (i.e. in case of reverse charge mechanism), the amount on which TDS is to be deducted shall be Rs. 100/- and not Rs. 112.36.

1 Like

(Guest)

In my veiw it suppose to be assume that the invoice is inculded service tax or else why service reciever should liable to pay the service tax..? Yes agree that the billing is only Rs. 100 but according to service reciever total cash outflow from his hand for such service is including service tax... The practice is to deduct tax on inclusive of service tax.

In the given case we cannot deduct TDS on only service tax which is remitting to government because TDS not deducted to service provider is it...! In another kind of service trasactions(except reverse charge machanism) the service provider liable to service tax and has to bear TDS too...

Thanks for your earlier comments.