Non Applicability of IT TDS on Service Tax Component of Invoice - Professionals - Taxation - TIK Share
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Non Applicability of IT TDS on Service Tax Component of Invoice


Prem Chand Jangir

2014-03-19

Non Applicability of IT TDS on Service Tax Component of Invoice

-Central Board of Direct Taxes has issued Circular# 1/2014 on January 13th 2014 regarding Non Applicability of IT TDS on Service Tax component of Invoice.

-According to that Tax Deduction at Source need not be done on Service Tax Component when Service Tax is indicated separately in terms between the Payer and the Payee and the Payee is resident.

-For an illustration if there is Service terms of Rs 1000 b/w the Payer and the Payee and Service Tax to be charged @ 12.36%  and IT TDS Rate is 10%, then prior to this circular IT TDS shall be calculated as Rs 112/- (Basic Rs 1000/- and ST Amount -123.6 shall be taken for IT TDS Calculation)

-Now after this circular if we refer the above Case IT TDS shall be calculated as Rs 100/-(Only Basic Amount Rs 1000/- shall be taken for IT TDS Calculation)

CA Pulkit Sharma

2014-03-19

This was required from a longer period. The notification came late, but its better to be late than never.

The logic makes sense, why one need to pay tax on service tax. Service Tax is not the income of receiver, its the money that he has to remit to government.

Tax should be deducted on income and not on liability.

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