CBDT Accepts High Court Verdict Of No TDS On Service-Tax Component

The CBDT has issued Circular No. 1/2014 dated 13.01.2014 pointing out that the Rajasthan High Court has taken the view in CIT(TDS) vs. Rajashthan Urban Infrastructure (copy attached) 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. Pursuant thereto, the CBDT has decided in exercise of powers u/s 119 that wherever the terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount 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.


2 comments on “CBDT Accepts High Court Verdict Of No TDS On Service-Tax Component
  1. Suresh Shivtarkar says:

    What I interpreted is that this circular will give effect to all section under chapter XVII-B and not only the 194J. Is it applicable for 194J only or all other sections too? Please clarify.

  2. HEMANT R. SHAH says:

    I would like to know as to what is the effective date for this Circular to apply. Whether TDS deducted on or after 13th January, 2014 or for Assessment Year 2014-15 & onwards or even retrospective ?

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