Tds on invoice value or base value

[Rahul Bagaria]

Is TDS to be deducted on the total invoice value (inclusive of Service Tax)or only on the base value of the invoice. Also my company deduct TDS only on the rent value and not on the total invoice value including service tax. Is there any specific provision in relation to rent?

[madhavvan n]

clarification on whether tds to be deducted on servicetax element in rent of immovable property / plant equipment answer is tds is not to be deducted on service tax portion of rent please see clarification by cbdt below As per the provisions of 194-I, tax is deductible at source on income by way rent paid to any resident. Further rent has been defined in 194-I 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 doesnt 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. in respect of all other payments tds is to be deducted including service tax since there is no specific clarifcation to that effect ( WCT payments, other charges etc)

[Rahul Bagaria]

Thanks Mr Madhawan for the reply, but even in case of professional and contractual obligations/ service, Service Tax so imposed by the venodr goes to the govt. kitty.He merely acts as a collecting agent so why not the same provisions unlike 194I be applicable to them as well

[Surender Gupta]

Yes, you are right Mr. Rahul Bagaria, everyone is asking this question to the central government but no answer from the CBDT or central government. Till than we have to follow the provisions what they are.

AI Summary

Debate on TDS Application: Should Service Tax Be Excluded from Total Invoice Value Under Section 194-I? A discussion forum addresses whether Tax Deducted at Source (TDS) should be applied to the total invoice value, including Service Tax, or just the base value. A participant clarifies that under Section 194-I of the Income Tax Act, TDS on rent should exclude the Service Tax portion, as Service Tax is collected by the landlord on behalf of the government. Another participant questions why similar provisions are not applied to professional and contractual services, noting the lack of guidance from the Central Board of Direct Taxes (CBDT) on this issue. Participants express the need to adhere to existing provisions until further clarification is provided.