Dear Friends

The point that has been brought to the fore by this circular is that - in all those sections under the TDS provisions where the term "any sum" has been used - TDS will have to be made on the amount including Service Tax, whereas where the term "such income:" has been used the TDS will be made only on the amount excluding Service Tax.

Regards

CA Deepak Gadgil

Solapur, Maharashtra

--- On Fri, 2/5/08, Madhukar Hiregange <madhukarhiregange@...> wrote:

From: Madhukar Hiregange <madhukarhiregange@...>
Subject: {amresh's-CA's} Re: TDS on Service Tax
To: ICAI_CIRC_MEERUT_CA@yahoogroups.com
Date: Friday, 2 May, 2008, 11:59 AM

Dear Friends,

 

The TDS on service tax was an old issue . Some of us have been of the view that the same was not liable. However, the fact that there was an earlier clarification people chose to deduct the tax on ST also.

Now that this circular is in force, there is no need to deduct the TDS for any ST as the logic appears to apply across the board.

If different view is there please revert.

 

Regards

Madhukar

sachin.jain@ in.michelin. com wrote:

The following new circular is in Air, Please go trough it. But please be kept in mind that this is for only Section 194 I. CIRCULAR NO 4/2008 , Dated: April 28, 2008 Clarification on deduction of tax at source (TDS) on service tax component on rental income u/s. 194-I of the Income Tax Act. Representations/ letters have been received in the Board seeking clarification as to whether TDS provisions u/s. 194-I of the Income Tax Act will be applicable on the gross rental amount payable (inclusive of service tax) or net rental amount payable (exclusive of service tax). 2. The matter has been examined by the Board. As per the provisions of 194I, tax is deductible at source on income by way rent paid to any resident. Further rent has been defined in 194I as " rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,- (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; 3. Service tax paid by the tenant doesn't partake the nature of "income" of the landlord. The landlord only acts as a collecting agency for Government for collection of Service Tax. Therefore it has been decided that tax deduction at source (TDS) under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax. 4. These instructions may be brought to the notice of all officers working in your region for strict compliance. 5. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties. F.No.275/73/ 2007-IT(B) (Ansuman Pattnaik) Deputy Secretary (ITB) Sunil Dhiwa <sunil.dhiwa@ gmail.com> wrote: Hi All   TDS has to be deducted on Service tax also it means Bill of Rs. 10000+1236 = 11236 SO U need to deducted TDS On Rs. 11236 As per the cbdt cicular Regard's Sunil Dhiwa On 4/29/08, Del Tkr <deltkr@yahoo. com> wrote: Hi Vineet,   As pointed out by Mr. MKK, Vellor this subject requirs a fresh review.   TDS is a cre dit received by the service provider from its customer. This can't be encashed immediately and the funds remain locked till the conclusion of assessment.   It has a major impact where the quantum of Service Tax is high. The following message No. 7298 of aaykarbhavan also endorses the same opinion that TDS should not be deducted on the Service Tax Component.         Re: [aaykarbhavan] Re: Is TDS applicable on Service Tax     Dear MK,       I fully endorse the views and opinion that there should not be any TDS on Service Tax.       In a case where the Annual Service Tax Liability is around Rs. 1.00 Crore and a Corporate         TDS             deduction u/s 194J comes to Rs. 11.33 Lakhs.       The Deduction of Tax (TDS) on a Statutory Liability is not a wise decision because it has                                 an adverse affect on the Cash Flow of the Company.       The opinion given by CBDT needs to be reviewed in light of the hardships it causes.       Regards,       Sanjaya   Looking forward to your views on the above.   Thanks,   Del   ----- Original Message ---- From: VINEET SURANA <vineetxp@gmail. com> To: deltkr <deltkr@yahoo. com> Cc: TaxFinSoft@yahoogro ups.com Sent: Tuesday, April 29, 2008 9:27:39 AM Subject: Re: [TaxFinSoft] Re: TDS IS APPLICABLE ON SERVICE TAX ALSO? Pls go thru the attached file for final clarification on this issue. < DIV> Regards, Vineet Surana On 4/28/08, deltkr <deltkr@yahoo. com> wrote: Dear All, ; An Article published in the March 2008 issue of The Chartered Accountant titled " Role of Reimbursement of expenses while applying TDS Provisions - A Study " written by CA.S.C.Jalan has dealt with the matter in a different light. The Author concludes as follows: QUOTE Going by the literal interpretation of Circular No.715 dt 08-08-1995, it appears that Service tax ought to be considered for the purpose of T.D.S. However if one goes to the intent and purpose of the term, any sum paid in the light of the Supreme Court Decision < BR>in Tansmission Corporation of India (239 ITR 287) and Delhi Tribunal Decision in the case of Modicon Network (P) Ltd., (14 SOT 204) and the other decisions relating to CBDT Circulars, I am of the opinion that since the entire amount of Service tax has to be paid to the Service tax department, there is no income element or income hidden or income embedded therein. Hence no tax is required to be deducted on the service tax portion. UN QUOTE The controversy appears to be far from over! Regards CA.M.K.Krishnan Vellore Tamilnadu --- In TaxFinSoft@yahoogro ups.com, "kumud dixit" <kumud7892@.. .> wrote: > >   > I also have same views. > > Thanks > CA Kumud Dixit > > On Sat, 12 Apr 2008 Kamalesh wrote : > >Hi > > > >I am not in agreement with these views. TDS is on the gross amount (i.e., rent plus service tax). > > > >There was a news item in the newspapers stating the government is planning to ammend the IT Act to provide that tax is not to be deducted on Service Tax. This implies that till such time, the amendment comes through, TDS is applicable on the service tax component as well. > > > >Regards > > > >CA Kamalesh > > > > > >On Fri, 11 Apr 2008 Ritesh Prajapati wrote : > > >Dear All, > > > > > >I have same problem on Transporter bills. > > > > > >Please guide me on which amount I have to deduct the TDS ?? > > > > > >Regards, > > > > > >Ritesh Prajapati > > > > > > > > >hsbhatt1979@ ...: > > > > > > > Dear member,No need to deduct TDS on Service tax as it is not INCOME (rent in our case). Pls refer March 2008 - CA Journal - page 1524.Regards. ..CA. Hiren Bhatt098241 09112Dear membersIs TDS IS APPLICABLE ON SERVICE TAX ALSO? my client pays rent of Rs.30,000/- The land lord gives the bill for 30000+ 3,708/- = 33708.oo We have to deduct the tds on 30000 or 33708/- ? > Be a better friend, newshound, and know-it-all with Yahoo! Mobile. Try it now. With Warm Regards On Behalf of ManishShashank & Co. Shashank Mishra B.com A.C.A. DISA(ICA) Partner   Contacts: Off;- SF-5 ABC Complex, Quinton Road opp. Shubham Cinema Qaisarbagh Lko Ph (o)0522-3919355, mob:-09415105054 ,9415026508 email:-manishshasha nk@yahoo. co.in           From Chandigarh to Chennai - find friends all over India. Click here.

Warm Regards

Madhukar N Hiregange
Hiregange & Associates
Chartered Accountants
1010, 1st Floor,
26th Main, 4th T Block,
Jayanagar, Bangalore - 560 041
tel: 080-41210703

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