AMOUNT TO BE REMMITED AFTER DEDUCTING TDS U/S 195

[BHAVESH PATEL]

IF COMPANY RECEIVED PROFESSIONAL AND TECHNICAL SERVICE FORM FOREIGN COMPANY.
RECEIPENT COMPANY PAID SERVICE TAX ON IMPORT OF SERVICES.
SAY BILL $ 1000
SERVICE TAX PAID BY INDIAN COMPANY @ 124

THEN TDS TO BE DEDUCTED ON WHAT AMOUNT AND WHAT AMOUNT TO BE REMMITED?????

[balas]

Hello Mr. Bhavesh,

TDS is not to be deducted on Service Tax. There is no provision to deduct tax on service tax which in itself is  a tax. TDS is deducted on 'Income' and not on 'Tax'.

The I.T. Act, under Chapter XVII, specifies on the categories of income which are subjected to TDS  and Service tax is not included 

Hope this helps.

Rgds
Bala FCA. LL.B

[camanojgupta]

Service tax paid by the tenant does not 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.—Vide Circular No. 4/2008, dt. 28-4-2008.
The payments made under section 194-I differ significantly from payment made under section 194J in the way that in the case of 194-I TDS has to be deducted on any income paid as rent. However, in the case of section 194J TDS has to be deducted on any sum paid as professional and technical fees. The Board had decided to exclude TDS on service tax component on rental payment because it was construed that service tax payment cannot be regarded as income of the landlord. Since section 194J covers any sum paid, therefore the board has decided not to extend the scope of Circular No. 4/2008, dated 28-4-2008 to such payment under section 194J.—Vide Circular F.No. 275/73/ 2007-IT(B), dt. 30-6-2008.
So the CBDT has opined differently on issue regarding deduction of tax on service tax component.
Section 195 uses the words " Any person responsible for paying to a non-resident, not being a company, or to a foreign company,  [any interest (not being interest referred to in section 194LB or section 194LC)]  [* * * *] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries"  [* * * *]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
The words used are " any other sum chargeable under the provisions of this Act ..." therefore no TDS will b made on service tax component of payment not because service tax is a tax.
CA MANOJ GUPTA
JODHPUR
09828510543

[BHAVESH PATEL]

Thank You for your reply.

It clear all my doubt and increase my knowledge too.

Hope for your support all d time!!!!!!!!!!!!

Regards
Bhavesh Patel