Pursuant to an important judgement of the Hon’ble Rajasthan High Court, in the case of Commissioner of Income Tax (TDS), Jaipur Vs. M/s. Rajasthan Urban Infrastructure [2013 (8) TMI 12 – RAJASTHAN HIGH COURT] holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Income Tax Act, 1961 (“the Act”).

Earlier, vide Circular No. 4/2008 dated 28-04-2008 it was clarified that tax is to be deducted at source under Section 194-I of the Act, on the amount of rent paid/payable without including the service tax component. Representations/letters has been filed to CBDT seeking clarification whether such principle can be extended to other provisions of the Act also.

CBDT has examined the matter afresh and clarified vide Circular No. 1/2014 dated 13-1-2014 (Produced Below)“TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax component comprised of payments made to residents” that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/ payable without including such service tax component.

—————-

Related Circular is as follows :-

CIRCULAR NO. 1/2014 [, DATED 13-1-2014

Subject: TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax component comprised in the payments made to residents – clarification regarding

The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.

2. Attention of CBDT has also been drawn to the judgement of the Hon’ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

4. This circular may be brought to the notice of all officer for compliance

F.NO.275/59/2012-IT(B)]

—————————————-

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail: bimaljain@hotmail.com

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One response to “No TDS on Service Tax if shown separately”

  1. gg says:

    Sir, plz say that you will not reply..unnecessary so many ppl are asking questions…

  2. Rajeeb says:

    Dear sir,
    If a firm is not applicable in service tax return( Law Firm) and that firm taken a service from a vendor( Computer maintenance service) what will be the tds( u/s 194c) deduction if the vendor raise a bill of Rs 10000+ s.tax 1400. Total 11400/-???

    Please reply to my email id (rajeebdarling@gmail.com)

  3. Rajeeb says:

    Dear sir,

    If a firm is not applicable in service tax return( Law Firm) and that firm taken a service from a vendor( Computer maintenance service) what will be the tds( u/s 194c) deduction if the vendor raise a bill of Rs 10000+ s.tax 1400. Total 11400/-???

  4. Sunil.A says:

    Is Service Tax applicable on Rent paid

  5. RAMESH says:

    I have 6 lakhs deposit since 2012 with a bank in individual capacity. Since I am a member of the that co-op Bank tax has not been deducted till march 2015. Earlier i was having PAN card with individual status. Now, i have obtained one more PAN card in the status of HUF as KARTA.

    The Bank is not accepting my request to replace the PAN Number in my customer ID from from individual PAN to HUF Pan, since the deposit has been opened in the individual capacity, HUF PAN can be accepteble for those old deposits.

    kindly clarify my whether Individual PAN can be replaced with HUF PAN.

    please send reply to my email id

    regards
    ramesh

  6. Eserviceshelp.in says:

    Dear Sir/ Madam,

    If in invoice Adveretisement Charges (on TV) i.e. cover in contract u/s 194c

    Total Bill is 250000.00
    Service tax is 30900.00
    total 280900.00

    should we deduct TDS on Rs. 250000.00 or 280900.00

    Thanks

  7. PANKAJ says:

    IF BILL SHOWS

    bill amount 10 for contract work

    service tax on 40% of bill amount = 4 x 12.36% .50

    contractor provide the bill as 10
    service tax of our share 0.25
    service tax of receiver share = 0.25

    BILL TOTAL 10.25

    TDS TO BE DEDUCTED ON 10 OR 10.25

    2. ANOTHER CONTRACTOR PROVIDED THE BILL AS

    SERVICE AMOUNT 10
    SERVICE TAX ON 40% OF BILL 0.50
    TOTAL BILL 10.50

    WHOSE BILL IS CORRECT AND ON WHAT AMOUNT TDS TO BE DEDUCTED, PLEASE CONFIRM

  8. Jaya Sankar Kumar says:

    TDS to be deducted only on the amount of Rs.30000 but not on Rs.33708 if and only if the 2 conditions satisfied.
    1. payment should be made to Resident
    2. Agreement should be there between Payer & payee that the amount of service tax will be collected separately means excluding the invoice amount.

  9. kamaljeet singh says:

    is Circular 1/2014 dated 13.01.14 applicable on sec 194C and 194H ?

  10. MURARI JHA says:

    IF BILL RAISED SAY ON 12/12/2013 OF SERVICE BILL AND SERVICE CHARGE AND SERVICE TAX SHOWN SEPARATELY. AND WE HAVE ENTERED SUCH BILL ENTRY IN FEB 2014 THEN WHETHER TDS WILL BE DEDUCTED INCLUDING SERVICE TAX OR EXCLUDING SERVICE TAX.

  11. Debashis Nayak says:

    “TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax component comprised of payments made to residents-Circular no.1/2014 dated 13.01.2014

    Query:-on which date this circular is applicable.

  12. Jitin Sachdeva says:

    Helloe everyone, I have a query, the cicular says that the terms of contract must indicate that the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

    So if a contract does not have reference to service tax, then wat shall be done in this scenario ???

  13. Mahesh says:

    Dear Sir/Madam

    what can i do if bills raised (with service tax) before 13 jan 2014 & received after 13 jan 2014.
    above case how to deduct tds?

    please clarify..

  14. Jitendra says:

    As per my understanding TDS shall be required to deduct on the service amount (excluding service tax portion).However if the total bill is inclusive of service tax without indicating the amount of service tax charged on the invoice then tds shall be deducted on the whole amount of service(i.e inclusive of service tax)

  15. manish jain says:

    Dear Sir

    no tds on service tax apply the bill generated on 13th Jan 2014 & onwards

    if bills generated earlier than 13 jan 2014 & to be book in currents date than what can i do tds deduct or not deduct on that please clear it

    Manish Jain

  16. CA Rajiv Bansal says:

    From the clear reading of this circular

    and my understanding this circular is applicable to whole chapter XVII B i.e. to all the sections under which TDS is liable to be deducted.
    Now as per my TDS is not required to be deducted on service tax component w.e.f 13.01.2014.
    Further clarification from CBDT is sought….

    Regards
    CA. Rajiv Bansal

  17. Rahul says:

    whether this circular is applicable to whole of the India?

  18. Rahul says:

    Whether this circular is applicable to whole of India and from which date?

  19. Anand Kumar says:

    Whether this is applicable to all service bills or only for bills u/s 194J?

    and in Rent (194-I) case we have to charge TDS on 194-I, or what?

  20. JITENDER says:

    it is applicable only on 194 I AND 194 J
    NOT FOR ALL SECTIONS

  21. Sumit Pratap Singh says:

    1. This circular is effective from the date of publication itself i.e. 13/01/2014.
    2. It is applicable on all service bills provided service tax is specifically mentioned separately because circulars refers to whole chapter XVII-B.

  22. Shaifali says:

    Dear Sir/ Madam,

    If in invoice professional charges and service tax included amount of Rs.30000 plus Rs.3708 = Rs.33708 ( Bill amount) in this case how to deduct TDS? can you explain me.

  23. kamlesh says:

    to yugapriyan-
    in the said case the tds will be deducted on 30000 that is 10% ₹ 3000 respectively.

  24. Krishna Lokapur says:

    Whether this is applicable to all service bills or only for bills u/s 194J.

  25. H.R.Shenoy says:

    Good decision little late though.

  26. Nitin B Padave says:

    What is effective date of this circular.

  27. Dhara says:

    Is this circular applicable to all sections of TDS???

  28. Yugapriyan says:

    Dear Sir/ Madam,

    If in invoice professional charges and service tax included amount of Rs.30000 plus Rs.3708 = Rs.33708 ( Bill amount) in this case how to deduct TDS? can you explain me.

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