TDS on Service tax paid on reverse charge paid to advocates

[jatin Gandhi]

We have paid legal fees to our advocate amounting to Rs.100000/-. We have deducted TDS under section 194J @ 10% on Rs.100000/-. Our chartered accountant is adamant that TDS is required to be deducted on Service Tax component paid under reverse charge mechanism.

As per my understanding TDS is required to be deduted on the gross amount charged by service provider. In this case, the gross bill is only Rs100000/-.

Kindly guide whether my position is right or not?

 

AI Summary

TDS on service tax should exclude reverse-charge service tax; withholding confined to professional fees payable under contract.
TDS under fees for professional or technical services is deductible only on the amount the payer is liable to pay to the service provider; where service tax is payable separately by the recipient under reverse charge, that service tax component is not included in the taxable fee for withholding, and the contract's allocation of fees and service tax determines the withholding scope.