No TDS on Service Tax in 194J: -
Income Tax Department has issued
a Circular No. 1/2014 [F.NO.275/59/2012-IT(B)], dated 13.01.2014 regarding
clarification on TDS on 194J or 194-I without including the service tax
component if service tax is to be paid separately as per the terms of agreement
between the payer and the payee.
SECTION 194-I OF THE INCOME-TAX
ACT, 1961 - DEDUCTION OF TAX AT SOURCE -
RENT – CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SERVICE
TAX COMPONENT COMPRISED OF PAYMENTS MADE
TO RESIDENTS
CIRCULAR NO. 1/2014
[F.NO.275/59/2012-IT(B)], DATED 13-1-2014
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 officers for compliance.
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