Tds on service tax

Tax can be deducted either on professional fee only or on the gross amount charged (ie: fees+Servicetax)

I think one should deduct TDS on professional fees + service tax u/s194J

Circulars are binding only on the income tax authorities and not on the assessee (UCO bank Vs CIT) and not on the court (KP Varghese Vs ITO). Therefore, the court may overrule a provision of a circular, but that does not invalidate the circular for the income tax authorities.

Thanks Mihir for insights on operational effects of Circulars. Does the same apply to a "Clarification" too. ?

Just remeber that TDS U/s 194 I is on Rent amount excluding service tax

TDS on others payments are on total bill amount including service tax

Dear Madhavi,

As your Querry,

 

Thanks & regards

CA VIKAS GARG

vikasforu12 @ gmail.com

The reason for non deduction of tds on amnt of ST lies itself in the section 194I sinse it mention amount of "Rent Paid" ie it wud nt include the amt of service tax sinse reciever act as a collector of tax on behalf of govt whr as wen we talk abt 194C nd 194J it mentions "amount of credit given" ie it includes the amnt of service tax hence tds shud be deducted on the amnt of ST paid for professional service subject to joint nd reverse charge applicability...

Facts & Background:

M/s Rajasthan Urban Infrastructure Development Project (“the Respondent”or “the RUIDP”or “the assessee”) is a project of Government of Rajasthan for the Infrastructure Development and Civic Amenities in the specified areas/ cities in the state of Rajasthan. The RUIDP appoints the technical and project consultants and deducts income tax at source from the amount of fee payable as per the agreement and deposit the same as per the relevant provisions of the Income Tax Act, 1961 (“the Income Tax Act”) and subsequently files the return for the same within due time.

The Assessing Officer, vide its order dated 30.01.2009 raised a demand of Rs. 1,70,881/- along with interest thereon amounting to Rs. 44,776/-, on account of TDS on the amount paid as Service Tax pertaining to Financial Year 2005-06. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Jaipur which was allowed. Being aggrieved with the same, the Revenue filed an appeal before the Income Tax Appellate Tribunal, Jaipur but the same was dismissed. Hence the revenue preferred an appeal before the Hon’ble Rajasthan High Court.

Held:

It was held by the Hon’ble Rajasthan High Court that if Service tax is payable in addition to professional/ technical fees under the contract, the withholding tax will be restricted to the professional fees. Hence, examination of contract terms is imperative.

The Hon’ble Rajasthan High Court held that the words “any sum paid” used in Section 194J of the Income Tax Act, relate to “fees for professional services or fees for technical services”. In terms of the agreement, the amount of Service Tax was to be paid separately and was not included in the fees. Hence the orders passed by Appellate Authority as well as the Appellate Tribunal are in accordance with the provisions of Section 194J of the Income Tax Act.

Points to note:

The Central Board of Direct Tax (“the CBDT”) vide its Circular No. 4/2008, dated 28.04.2008 held that TDS under Section 194I of the Income Tax Act would be required to be made on the amount of rent paid/payable without including the Service Tax. However, the CBDT vide its Circular No. 275/73/2007-IT(B), dated 30.06.2008 decided not to extend the scope of Circular No. 4/2008 to payment made under Section 194J of the Income Tax Act since it covers any sum paid.

Therefore, it remains to be seen that whether the Revenue files another appeal before the Hon’ble Supreme Court or accepts the above judgment of the Hon’ble Rajasthan High Court and gives relief to assessees.

Professional Charges is Rs 100.00 

Service Tax                     Rs. 12.36

Total                                Rs.112.36

TDS will be deducted on Amount 112.36

 

 

We are paying Rent to landlord for office premises that comes under section 194I but we are also paying amenities charges to landlord i think its comes under section 194C. landlord has made to different agreement for Rent of premises & Amenities charges. now landlord has provided 197 exemption certificate to us for 194I ( for both rent on building & rent on plant & machnery)  but i want to say that Amenites charges are comes under section 194C but landlord arguing with us & saying for both the services we should take under 194I. 

can anyone clerifiy that amenities charges (Lift & water pump service,Genrator power service for building, annual maintence charges, sweepers, replacement of electrical and plumbing fittings, security staff etc.) comes under which section?

if any one have notification for TDS on amenities charges plz let me know.

Please answer as soon as possible