Whether service tax is payable on T.D.S. deducted on Freight

Dear Sir,

My quary is that, whether service tax is payable on the T.D.S. deducted on the Transportor bills and subsquently can we take CENVAT of the same ?

For Example:

Mr. "X" is an transportor who has raised bill of  Rs. 100.00 on carriage inward to M/s. XYZ . The accountant has deducted TDS - Contractor @ 2.06% and paid Rs. 97.04 to Mr. "X".

Since such services are covered under GTA, the accountant now has calculated a Service Tax Liability @ 12.36% on Rs. 100.00 and paid the same to Service Tax Department and also taken CENVAT of Rs. 12.36.

My quation is that, whether the accountant is correct or should he have calculated Service Tax 12.36% on Rs. 97.04 instead ?

If the accountant is correct will it be a case of Tax on Tax paid to govt. ?

Please explain in the light of the recent CBDT circular in case of 194-I where by TDS is not payable on Service Tax?

 

 

Replies (6)

Hi Ravi. As per Circular  715 issued by CBDT, TDS will be calculated only on the Gross amount of the Bill which is inclusive of Service Tax. Except TDS on Rent which is exclusive of Service Tax.

In otherwords, TDS has to be on Rs.112.36.

The accountant is absolutely correct. ST required to be calculated on Gorss value instead Net value.

I am compleetely agree with all of the above answer, but Mr. Ravi has confusion to bill, with his example bill amount should be 100+12.36 = 112.36 not 100.
 

Why dont u use the ask the expert/ discussion board on www.servicetaxdelhi.gov.in. They are good and responsive. And usually straight and direct. 99% accurate.

 

What do you mean by G.T.A.?

Is it Goods Transport Association or

Goods Transport Agents.

If so why?

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