Today, the Central Board of Direct Taxes (CBDT) has issued a Circular No.23/2017 clarifying that wherever in terms of the agreement or contract between the payer and the payee, the component of 'Goods and Services Tax (GST) on services' comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Income-tax Act, 1961 (the Act) on the amount paid or payable without including such 'GST on services' component. GST for these purposes shall include Integrated GST, Central GST, State GST and Union Territory GST.
For the purposes of this Circular, any reference to 'service tax ' in an existing agreement or contract which was entered prior to 1 July 2017 shall be treated as 'GST on services' with respect to the period from 1 July 2017 onward till the expiry of such agreement or contract.
The CBDT Circular is attached here for your reference. Please communicate appropriately to your relevant client group. #pdf